8th Pay Commission: Will the Rising AICPI-IW Lead to a DA Hike?

The steady increase in the AICPI-IW has sparked optimism among central government employees and pensioners about a possible DA hike under the upcoming 8th Pay Commission (CPC). The index, which reflects retail inflation faced by industrial workers, serves as a key factor in calculating DA and dearness relief (DR).

AICPI-IW Continues Its Upward Trend

According to the Labour Bureau, the AICPI-IW for September 2025 rose by 0.2 points to 147.3, continuing its upward momentum for the third straight month. The index had earlier climbed 0.6 points in August and 1.5 points in July, indicating persistent inflationary trends.

The year-on-year inflation rate for September stood at 2.79%, slightly lower than 4.22% in the same month last year. This suggests that while inflation is moderating, price pressures remain visible in certain categories like clothing and household expenses.

Breakdown of Category-Wise Changes

The data shows mild corrections in food and fuel prices but notable increases in clothing, footwear, and miscellaneous categories. This gradual rise in the overall index indicates a continued rise in living costs, which directly impacts DA calculations.

What the Rise Means for DA and the 8th Pay Commission

As per the 7th Pay Commission framework, DA and DR for central government employees and pensioners are revised twice a year based on movements in the AICPI-IW index.

The July–December 2025 data will determine the next DA hike, effective January 1, 2026. Since the index has already shown consistent gains in the first three months, a higher DA revision appears likely—provided the trend continues through December.

The 8th Pay Commission, which has recently been set up, is expected to use this DA data as a key input for reviewing salaries and allowances. A higher DA rate in January 2026 could result in a larger pay adjustment when the 8th CPC recommendations come into effect. However, the Finance Ministry has asked the commission to review all allowances, which may influence the final outcome.

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Conclusion

The steady rise in AICPI-IW offers positive signals for government employees awaiting the next DA hike and the 8th Pay Commission’s recommendations. If inflation remains firm and the index continues its upward movement till year-end, central government staff and pensioners could see a meaningful boost in their pay and relief from January 2026 onwards.

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