dearness

Dearness refers to the state of being expensive or costly. In economic discourse, dearness describes the rise in the general price level of goods and services, which reduces the purchasing power of money and increases the cost of living. The degree of dearness is commonly measured by price indices such as the consumer price index. Governments and employers use the concept to justify adjustments to incomes.

In some countries, including India, the term appears in formal wage policy as Dearness Allowance (DA). DA is a monthly allowance added to basic pay and pensions to offset the impact of inflation on living costs. It is typically calculated as a percentage of basic pay and is revised semi-annually or annually based on changes in the CPI. DA aims to preserve real wages rather than to promote additional consumption.

Beyond payroll contexts, dearness is a general economic phenomenon linked to inflation, rather than a single policy instrument. It interacts with monetary policy, wage-setting, and social security systems. Critics note that price-index adjustments may lag behind actual experiences or regional price variation, and advocates argue that timely adjustments help protect living standards.

In everyday language, dearness also denotes something cherished or beloved, though in economic writing the term most often conveys price increases and their effects on households.