New Delhi, Sep 15 (IANS): Ahead of the festival season, the government Thursday raised the dearness allowance of central government employees and pensioners by 7 percent effective July 1 in view of the stubbornly high inflation.

"Dearness allowance of central government employees is rised from 51 percent to 58 percent. The hike is effective from July 1, 2011," Information and Broadcasting Minister Ambika Soni told reporters here after a cabinet meeting chaired by Prime Minister Manmohan Singh Thursday.

Soni said the hike in dearness allowance would provide major relief to the employees and pensioners as prices of essential commodities have been consistently rising.

"The total financial implications due to the hike will be Rs.7,228.76 crore per annum. During the current financial year it will be Rs.4,819.22 crore," Soni said.

Nearly five million central government employees and four million pensioners would benefit from the decision.

Soni said the government was taking a series of measures to minimise the impact of rising prices on the common people.

Inflation has remained stubbornly high, near double-digits, for almost two years.

According to official data released Wednesday, the headline inflation, based on the the Wholesale Price Index, rose to 9.78 percent in August as compared to 9.22 percent in the previous month and 8.87 percent in August 2010.

Food inflation declined marginally to 9.47 percent for the week ended Sep 3 as compared to 9.55 percent in the previous week, according to data released by the ministry of commerce and industry Thursday.