The Labour Bureau reported retail inflation hit 155.4 in September 2026, pushing the Dearness Allowance to 65%. This hike followed a rise in the All India Consumer Price Index. Future adjustments for January 2027 depend on inflation trends, and many expect the rate could reach 67% or even 68% soon.
Synopsis
DA hike: In September 2026, the Labour Bureau reported a rise in retail inflation to 155.4. This surge has resulted in a Dearness Allowance (DA) adjustment to 65%. Looking ahead, the projections for January 2027 are contingent on inflation trends. Should inflation vary, the DA might reach 67% or even 68%. The Finance Ministry will ultimately provide confirmation of the DA increase based on retail inflation parameters.
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The Labour Bureau has released retail inflation figures for September 2026. Retail inflation, which is tracked by the All India Consumer Price Index – Industrial Workers (AICPI-IW), hit 155.4 in September, a full 1 point higher than the August figure of 154.5.
Following the September retail inflation update, the running DA has reached 65%. However, the next announcement for a DA increase (for January 2027) will depend on the average inflation from January to December 2026.
Going by the latest inflation trend, could the DA in January hit 67% or more? Check the estimates to find out!
But first, understand how the running DA rate climbed to 65% following the September inflation data.
65% DA calculation after September retail inflation data
When we calculate DA, we consider the retail inflation over the past 12 months. The Labour Bureau releases the inflation data for the previous month at the end of the following month. For example, the inflation data for April is released at the end of May.
To determine the current DA rate, we will look at the average inflation from October 2025 to September 2026.
All India Consumer Price Index – Industrial Workers (AICPI-IW)
Month ACIPI-IW index in last 12 months Oct-25 147.7 Nov-25 148.2 Dec-25 148.2 Jan-26 148.6 Feb-26 148.5 Mar-26 149.1 Apr-26 149.9 May-26 150.8 Jun-26 151.9 Jul-26 153.2 Aug-26 154.5 Sep-26 155.5 Average 150.5
However, for calculating DA, we first have to link the 2016 base value to the 2001 base value by multiplying it by 2.88.
The factor of 2.88 is arrived at to equate the latest base year (2016) to 2001.
Labour Bureau data shows that for August 2020, the value of CPI-IW under the old base (2001=100) was 33.8 and CPI-IW under the new base (2016=100) was 117.4, so the factor is calculated as 338 ÷ 117.4= 2.88.
DA% = [{12-month average of AICPI-IW (base year 2001)– 261.42}/261.42x100]
DA% after September inflation data= (150.5X2.88)– 261.42}/261.42X100] = 65.81% (65%)
The government doesn’t calculate DA in decimals, and a 65.81% DA is effectively a 65% DA. However, 0.81% gets adjusted to the next DA cycle.
Can DA reach 67% or 68% for January 2027?
It depends on the retail inflation data for October, November and December. Since it will take a few months to know them, we can assume three inflation scenarios in the next three months.
Scenario 1: If inflation declines
Given the current scenario of rising fuel costs, domestic market instability and geopolitical factors, the chances of a decline in retail inflation are low. But if we assume that it would slip back to the August, July and June 2026 levels of 154.5, 153.2 and 151.9, respectively, in October, November and December, the estimated DA for January 2027 would be 67.23%= 67%.
Scenario 2: If inflation rises
If inflation keeps rising at the same levels as it rose in the last 3 months, and we assume 156.8, 158.1 and 159.1 inflation for October, November and December, the estimated DA for January can reach 68.56%= 68%.
Partciulars If inflation decreases (data) If inflation increases (data) If inflation remains the same (data) Jan-26 148.6 148.6 148.6 Feb-26 148.5 148.5 148.5 Mar-26 149.1 149.1 149.1 Apr-26 149.9 149.9 149.9 May-26 150.8 150.8 150.8 Jun-26 151.9 151.9 151.9 Jul-26 153.2 153.2 153.2 Aug-26 154.5 154.5 154.5 Sep-26 155.5 155.5 155.5 Oct-26 154.5 156.8 155.5 Nov-26 153.2 158.1 155.5 Dec-26 151.9 159.1 155.5 12-month average 151.8 151.3 152.375 DA (absolute) 67.23% 68.56% 67.78% DA (approx) 67% 68% 67%
Scenario 3: If inflation remains the same
If retail inflation in October, November and December remains the same as in September, the estimated DA for January will be 67.78%= 67%.
Therefore, it is evident that if inflation increases, central government employees might receive 68% DA for January 2027. If it decreases to the levels of the past three months or remains the same as in September, the projected DA for January 2027 could be 67%.
But these are estimates and the final decision on the DA hike rests with the Finance Ministry.