DA/DR Likely to Touch 60% From January 2026 as November CPI-IW Seals Milestone, Boosts 8th CPC Fitment Outlook

DA/DR Likely to Touch 60% From January 2026 as November CPI-IW Seals Milestone, Boosts 8th CPC Fitment Outlook

Central Government employees and pensioners are set to reach a key milestone in Dearness Allowance (DA) and Dearness Relief (DR), with the latest inflation data indicating that the rate is poised to touch 60% from January 1, 2026.

The confirmation comes after the release of the All-India Consumer Price Index for Industrial Workers (AICPI-IW) for November 2025, issued by the Labour Bureau on December 31, 2025.

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According to the official data, the CPI-IW index for November 2025 rose by 0.5 points to 148.2 (base year 2016=100). This increase has pushed the 12-month average used for DA calculation to 59.93% under the 7th Central Pay Commission formula, effectively confirming a rounded DA/DR rate of 60% for the January 2026 revision, irrespective of minor movement in the December index.

The CPI-IW trend over the last five months shows steady inflationary pressure. The index moved from 146.5 in July 2025 to 148.2 in November 2025, gradually lifting the DA calculation from 58.53% to 59.93%.

Even if the December 2025 index remains unchanged, rises further, or dips marginally, the final DA figure will remain within the 60% band, as the Government considers only whole numbers for DA announcements.

The Labour Bureau also reported that year-on-year inflation for November 2025 stood at 2.56%, significantly lower than the 3.88% recorded in November 2024, indicating moderate but persistent price pressures in industrial centres.

This DA revision holds special significance as January 1, 2026 marks the commencement of the 8th Central Pay Commission (CPC) reference period. Historically, when a new Pay Commission is implemented, the prevailing DA is merged with the basic pay, and the DA is reset to zero in the new pay structure.

In that context, the expected 60% DA will act as the inflation buffer and play a critical role in shaping the fitment factor under the 8th CPC.

While the formal government notification for the January 2026 DA/DR hike is expected around March or April 2026, the increase will be effective from January 1, with arrears payable accordingly.

For employees and pensioners, the move provides continued protection against inflation and sets an important baseline as the country transitions from the 7th Pay Commission framework to the 8th CPC era.

The November CPI-IW release has therefore all but sealed the outcome, making a 2% DA/DR increase from the existing 58% to 60% virtually certain at the start of 2026.