DA from January 2019 – Will it be impacted by 10 point increase in CPI for July 2018?

DA from January 2019 – CPI for the month of July 2018 witnessed unprecedented
10 point increase – Highest monthly increase in CPI index (Base 2001=100) witnessed earlier was 7 points in the month of July 2009

Will it impact DA from January 2019 payable to Central Government Employees ?

DA from January 2019Govt has released All India Consumer Price Index (Industrial workers) for the Month of July 2018. It could be seen that increase in CPI is 10 Points which is unprecedented in the recent years

Details of All India Consumer Price Index for the month of July 2018

Historical data reveals that out of consumer price index for the period from 2005 to June 2018, highest monthly increase in the index was recorded in the month of July 2009 which was 7 Points.

Consumer price Index from the year 2005

Consumer price index

As Dearness Allowance with effect from January 2019 applicable to Central Government Employees depends on Consumer Price Index from January 2018 to December 2018, extraordinary increase in CPI in one month may not impact much on DA from January 2019. However, if this inflationary trend continues, quantum of Dearness Allowance payable with effect from January 2019 will be at higher side

We have attempted to estimate the DA from January 2019 for Central Government Employees and Pensioners based on assumed Consumer Price Index for the months from August 2018 to December 2018.

DA from January 2019:

Actual Consumer Price Index from January 2018 to July 2018 is as follows.

Month Actual AICPI-IW
Jan-2018 288
Feb-2018 288
Mar-2018 287
Apr-2018 288
May-2018 289
Jun-2018 291
Jul-2018 301
Aug-2018 To be released
Sep-2018 To be released
Oct-2018 To be released
Nov-2018 To be released
Dec-2018 To be released

If we assume that there is no change in Consumer Price Index for the period from August 2018 to December 2018 , then DA from January 2019 is estimated as follows.

DA with effect from 1st January 2019 = [ (288+288+287+288+289+291+301+301+301+301+301+301)/12]-(261.4)X100/261.4
= 12 % (increase of 3% from the DA of 9% w.e.f July 2018)

 

If we assume a moderate increase of 1 point in Consumer Price Index for the period from August 2018 to December 2018 in each of these months, then DA from January 2019 will be 13%, which is 4% higher than the current level.

DA with effect from 1st January 2019 = [ (288+288+287+288+289+291+301+301+302+303+304+305)/12]-(261.4)X100/261.4
= 13 % (increase of 4% from the DA of 9% w.e.f July 2018)

The following DA Calculator will be handy to check the above DA Calculation.

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