DA from July 2019 – Increase will be not less than 4% – CPI trend suggests

DA from July 2019 – Increase will be not less than 4% – CPI trend suggests

DA from July 2019 – All India Consumer Price

 Index from July 2018 and May 2019 suggests

 that increase in DA for Central Government 

Employees with effect from July 2019 will be 

not less than 4%

DA increase in July 2019 will be highest ever since January 2016 viz., from the implementation of 7th Pay Commission recommendations.

5% DA increase is possible if consumer price Index stays at the same level in June 2019.

Update 01-07-2019: DA from July 2019 for Central Government Employees is all set to increase by 5% as Consumer price index for the month of May 2019 increased by 2 points. If this index stays at this level and witnessed any increase from here, our calculations shows the DA for Central Government Employees from the month of July 2019 will be 17%

All India Consumer Price Index  for the month of May 2019 has been released recently. With this release, CPI for 11months from July 2018 to May 2019, which are needed to determine Dearness Allowance for Central Government Employees with effect from July 2019 is available.

Using this data, we have analysed and estimated possible DA from July 2019 for Central Government Employees including Railway Employees, Defence Personnel and Pensioners in this article.

Pattern of Consumer Price Index from July 2018:

The subject period has witnessed one Phenomenal increase in Consumer Price Index from 291 to 301 which is 10 points increase in July 2018 alone. 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.

From August 2018 to December 2018, trend in CPI was steady as it remained in 301 in December 2018, after increased to 302 during October 2018 and November 2018.

However, Consumer Price Index for the month of January 2019, recorded considerable increase of 6 points and moved to 307. This increasing trend continued and in the month of May 2019 CPI is recorded at 314.

Consumer Price Index from July 2018 to May 2019 is as follows.

Month	Actual AICPI-IW
Jul-2018	301
Aug-2018	301
Sep-2018	301
Oct-2018	302
Nov-2018	302
Dec-2018	301
Jan-2019	307
Feb-2019	307
Mar-2019	309
Apr-2019	312
May-2019	314
Jun-2019	Yet to be Released

We have attempted to project consumer price index for the remaining one month and thereby estimate DA from July 2019.

What will be the DA from July 2019 if CPI remained at 314 in the remaining one month?

As we suggested in the preface to this article, if the inflationary trend in Consumer price index that exists from January 2019 continues, there is a possibility of CPI stays at 314 in the month of June 2019 or increase by one or two points. In that case, DA from July 2019, will be 17% which is 5% increase from the current level of DA.

Calculation of DA using the above data is as follows:

DA with effect from 1st July 2019	= [ (301+301+301+302+302+301+307+307+309+312+314+312)/12]-(261.4)X100/261.4
	= 17 % (increase of 5% from the DA of 12% w.e.f Jan 2019)

 How much will be the increase in DA if CPI decreases from 314 in June 2019?

In that case, increase in DA from July 2019 will be 4% and all Central Government Employees including Railway Employees, Defence Personnel and Pensioners will be entitled to Dearness Allowance of 16% with effect from July 2019.

DA with effect from 1st July 2019	= [ (301+301+301+302+302+301+307+307+309+312+314+312)/12]-(261.4)X100/261.4
	= 16 % (increase of 4% from the DA of 12% w.e.f Jan 2019)

Is there any chance of increase in DA from July 2019 will be less than 4% ?

There is a very remote chance of getting increase in DA from July 2019 less than 4%, as this Scenario is possible only if All India Consumer Price Index decreases by 33 points and move to 281 in the month of Jun 2019.

DA with effect from 1st July 2019	= [ (301+301+301+302+302+301+307+307+309+312+314+281)/12]-(261.4)X100/261.4
	= 15 % (increase of 3% from the DA of 12% w.e.f Jan 2019)