DA hike: Millions of central government employees are likely to get a 4% increase in Dearness Allowance (DA) starting from July 2025. Reports based on the latest inflation data suggest that this DA hike July 2025 will push the allowance from the current 55% to 59%.

CPI Data Backs the Expected Hike

The hike prediction is based on the All India Consumer Price Index for Industrial Workers (AICPI-IW). The index rose by 0.5 points in May 2025, reaching 144. This steady upward trend began in March when the index was at 143, then 143.5 in April, and now sits at 144 for May.

If the June index touches 144.5, the average for the past 12 months will reach about 144.17. Applying the 7th Pay Commission formula, this figure suggests a new DA rate of around 58.85%. Rounded off, this means employees can expect a DA hike July 2025 to about 59%.

How the DA is Calculated

Under the 7th Pay Commission, DA is revised twice a year once in January and then in July. The calculation is based on a standard formula using average CPI-IW data for the past 12 months. 

This formula ensures that DA reflects real inflation and helps employees cope with rising living costs.

Announcement Expected Near Festive Season

Although the DA hike July 2025 will be effective from July, the official announcement is expected around September or October, just before the festive season. This follows the usual trend of announcements during Diwali or other major festivals.

This increase will be the final revision under the 7th Pay Commission, which will end its term on 31st December 2025. 

While the 8th Pay Commission was announced earlier this year, no chairman or committee members have been appointed yet. The Terms of Reference are also pending, which means it may take time before the new pay structure is ready.

8th Pay Commission Timeline

Typically, a new pay commission takes about 18 to 24 months to finalize its report and implement the changes. 

If the same timeline follows, central government employees could see the 8th Pay Commission’s recommendations coming into force by 2027.

Meanwhile, employees will continue to receive DA hikes as usual. Once the new pay structure kicks in from January 1, 2026, the salary revisions will likely be paid as arrears covering the gap until implementation.

Until then, the DA hike July 2025 will provide some financial relief to employees waiting for the next big pay update.