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Treasury head Rachel Reeves has revealed she is planning "targeted action to address cost of living pressures" in next month's Budget.

Speaking to the BBC, she emphasized that reducing inflation is a shared duty of both the government and the Bank of England.

The UK's inflation rate is expected to be the highest among the G7 industrialized countries this year and the following year.

Possible Utility Bill Measures

It is understood the government could intervene to reduce energy bills, for instance by cutting the current 5% rate of VAT applied on energy.

Another possibility is to reduce some of the government charges currently included in bills.

Fiscal Limitations and Expert Predictions

The government will obtain the next assessment from the independent fiscal watchdog, the Office for Budget Responsibility, on the start of the week, which will show how much room there is for such measures.

The view from most economists is that the Chancellor will have to declare higher taxes or spending cuts in order to meet her voluntary borrowing rules.

Previously on Thursday, analysis showed there was a £22 billion deficit for the Treasury chief to resolve, which is at the more modest range of projections.

"There's a joint task between the central bank and the administration to bear down further on some of the drivers of inflation," Reeves told the BBC in Washington, at the annual meetings of the International Monetary Fund and World Bank.

Revenue Pledges and International Issues

While much of the attention has been on likely tax rises, the chancellor said the most recent data from the fiscal watchdog had not altered her commitment to manifesto promises not to raise tax levels on income tax, sales tax or social security contributions.

She blamed an "unpredictable global environment" with growing geopolitical and trade issues for the fiscal tax moves, probably to be targeted on those "most able to pay."

International Trade Tensions

Addressing concerns about the United Kingdom's economic relations with the Asian nation she said: "Our national security always are paramount."

Last week's announcement by Chinese authorities to tighten export controls on rare earths and other materials that are crucial for advanced tech production led American leader Donald Trump to propose an additional 100% tariff on imports from China, increasing the prospect of an all-out trade war between the two economic giants.

The American finance chief called the Chinese decision "economic coercion" and "a international production power grab."

Questioned on accepting the American proposal to join its dispute with China, the Chancellor said she was "very concerned" by Chinese measures and called on the Chinese government "not to put up barriers and limit trade."

She said the decision was "harmful for the global economy and causes additional headwinds."

"I believe there are areas where we should challenge China, but there are also important prospects to export to China's economy, including banking sector and other areas of the economy. We've got to get that equilibrium right."

The Treasury chief also stated she was working with G7 counterparts "regarding our own critical minerals strategy, so that we are more independent."

Health Service Drug Costs and Funding

The Chancellor also admitted that the price the NHS spends on medicines could increase as a result of ongoing negotiations with the Trump administration and its pharmaceutical firms, in exchange for reduced taxes and funding.

Some of the world's largest drug companies have said recently that they are either halting or canceling operations in the United Kingdom, with some blaming the insufficient payments they are receiving.

Last month, the Science Minister said the price the NHS pays for drugs would must go up to stop companies and pharmaceutical investment departing from the United Kingdom.

Reeves stated to media: "It has been observed because of the pricing regime, that clinical trials, innovative medicines have not been provided in the United Kingdom in the way that they are in other continental states."

"The objective is to make sure that people receiving care from the NHS are able to access the best critical drugs in the globe. And so we are reviewing these issues, and... looking to secure more funding into the UK."