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Treasury head Rachel Reeves has revealed she is preparing "specific action to address cost of living issues" in the forthcoming Budget.

Speaking to the BBC, she stated that reducing inflation is a shared duty of both the government and the central bank.

The UK's inflation rate is forecast to be the most elevated among the Group of Seven industrialized countries this year and next.

Potential Utility Bill Interventions

It is understood the government could intervene to bring down utility costs, such as by slashing the present 5% level of value-added tax applied on energy supplies.

A further approach is to cut some of the regulatory levies presently added to bills.

Fiscal Constraints and Expert Predictions

The administration will receive the latest assessment from the official forecaster, the OBR, on Monday, which will show how much room there is for these actions.

The expectation from most economists is that Reeves will have to announce tax rises or spending cuts in order to meet her voluntary fiscal targets.

Earlier on Thursday, analysis indicated there was a £22bn shortfall for the Treasury chief to address, which is at the more modest range of projections.

"There's a joint job between the central bank and the government to further reduce some of the drivers of inflation," Reeves told the BBC in Washington, at the yearly gatherings of the IMF and global financial institution.

Tax Pledges and International Concerns

While a great deal of the attention has been on expected tax increases, the chancellor said the latest information from the OBR had not changed her vow to manifesto promises not to increase tax levels on earnings tax, VAT or social security contributions.

She attributed an "uncertain world" with rising international and commercial tensions for the Budget tax moves, probably to be focused on those "most able to pay."

International Economic Disputes

Addressing concerns about the UK's trade ties with the Asian nation she said: "The UK's security interests invariably are paramount."

Last week's announcement by Chinese authorities to strengthen export controls on rare earths and other materials that are crucial for high-technology manufacturing led US President Donald Trump to suggest an extra 100% import tax on goods from China, raising the possibility of an full-scale trade war between the two economic giants.

The American finance chief described China's move "economic coercion" and "a international production power grab."

Asked about accepting the American proposal to join its battle with China, Reeves said she was "extremely troubled" by Chinese actions and encouraged the Beijing authorities "not to put up barriers and limit trade."

She said the decision was "damaging for the international commerce and creates additional headwinds."

"I believe there are sectors where we must address China, but there are also valuable prospects to export to Chinese markets, including financial services and other sectors of the economic system. We've got to achieve that equilibrium correct."

The Treasury chief also confirmed she was cooperating with G7 counterparts "on our own critical minerals approach, so that we are more independent."

NHS Medicine Costs and Investment

Reeves also admitted that the price the National Health Service pays for pharmaceuticals could go up as a result of current discussions with the US government and its pharmaceutical firms, in exchange for lower tariffs and capital.

Some of the world's largest pharmaceutical manufacturers have said recently that they are either halting or canceling investments in the UK, with several blaming the modest returns they are obtaining.

Last month, the government science advisor said the cost the NHS spends on drugs would have to increase to stop businesses and drug research funding departing from the United Kingdom.

Reeves told media: "We have seen because of the cost structure, that medical research, new drugs have not been offered in the United Kingdom in the extent that they are in other continental states."

"Our aim is to make sure that individuals getting treatment from the National Health Service are can access the top life-saving medicines in the globe. And so we are reviewing these issues, and... seeking to obtain increased investment into Britain."