Jeremy Hunt is set to issue a new inflation warning, raising fears that interest rates will rise again this month.
The Finance Minister, pictured, is said to be concerned about internal Treasury forecasts that inflation is starting to rear its head again after months of decline. Inflation fell sharply in July to 6.8 percent from 7.9 percent.
But Treasury analysts believe it will rise again to more than 7 percent when August figures are published this month before falling again later this year.
The Chancellor is expected to issue a general warning on inflation in the coming days. Its revival may be the final blow to the Tories’ dwindling hopes that Hunt will use the autumn statement to cut taxes.
Ministers are set to tighten sickness benefit rules next week in a bid to encourage more people to return to work and reduce the benefit bill.
Work and Pensions Secretary Mel Stride is preparing to tighten rules around so-called work capability assessments, which are used to determine whether a person is fit for work.