But the increases would mean deep cuts in public spending — and tax rises.

The Department for Work and Pensions (DWP) usually uses September's inflation figures to make the decision on uprating benefit and pension payments from the following April.

Tory MPs have raised concerns that increasing benefits in line with wages, rather than inflation, would see real-term cuts for millions and warned against balancing the books “on the backs of the poorest”.

Chancellor Jeremy Hunt has said his Budget won’t "completely protect people" from inflation hell.

He said his priority will be shielding the poorest from crippling prices.

Real-term cuts to pensions and benefits are both on the cards as well as deep public sector cuts.

Ahead of the November 17 Autumn Statement Mr Hunt said: "While we can’t completely protect people from rising prices, my priority at the upcoming Autumn Statement will be to protect the poorest in society as we take the tough decisions necessary to fix our public finances."

A Treasury source said "no final decisions have been taken" and that benefits and pensions were still on the table.