AT 0.9 per cent, October’s inflation rate may have dipped slightly from the previous month’s one per cent but consumers can take little comfort from the figures.

The reason? The pound, which rallied somewhat in the wake of Donald Trump’s US election victory, remains weak, meaning the cost of goods and services will continue to rise over the coming months. As wages are showing no signs of growth, that can mean only one thing: the cash in our pockets is not going to go as far.

But with Chancellor Philip Hammond preparing to deliver his first Autumn Statement on Wednesday, is there anything he can do help alleviate the situation?

Yes, according to Paul Shattock, commercial sector specialist at insurer NFU Mutual, who said that if Hammond were to announce a cut to VAT it would not only make consumers’ money go further but would help stimulate the flagging economy too – something that could ultimately lead to wage growth in the longer term.

“With consumer spending coming under some pressure from rising inflation, the Chancellor’s decision to reset fiscal policy could possibly include the option of cutting VAT by as much as five per cent to support growth,” Shattock said.

“Our research suggests that even in a more probable situation of a one per cent cut, up to £3.9 billion could be ploughed into British business.”

According to the research, if the VAT rate was to drop by five percentage points from 20 per cent to 15 per cent, the average UK adult would be around £547 better off per year.

While this could provide some breathing space for those struggling to make ends meet in the current climate, for others it will mean more spare cash to plough into the economy.

Indeed, the NFU Mutual research found that 67 per cent of consumers would increase the amount they spent if prices were to fall as a result of a VAT cut. Over half (58 per cent) said they would use the cash to purchase items such as clothing, electrical goods and home and DIY products.

However, while a reduction in the rate of VAT could help offset the increase in prices seen in the wake of the fall in the pound, Laura Mair, a tax partner and head of corporate tax at EY in Scotland, said as consumer confidence remains reasonably robust Hammond may shy away from making the move yet.

“A temporary cut in the rate of VAT to boost growth and spending could prevent prices rising due to higher import costs caused by the weakening of the pound,” she said.

“This would repeat the temporary reduction at the height of the financial crisis. However, consumer confidence appears to be solid so the Chancellor may choose to keep this up his sleeve for a later date.”

Another area of taxation that the Association of British Insurers (ABI) is hoping Hammond will address in his Autumn Statement is insurance premium tax, which has shot up from six per cent to 10 per cent in the past year. The tax affects car, home, pet, private medical insurance and cash plans, as well as most commercial insurances, with the ABI estimating that the rise has added an extra £109 to the typical household’s insurance spend.

James Dalton, director of general insurance policy at the ABI, blasted the rises as a “raid on the responsible” and urged the Chancellor to take action to curb any further increases.

“Insurance premium tax is penalising millions of households and businesses throughout the UK who are doing the right thing by taking out insurance to protect themselves against many of life’s expensive uncertainties,” he said.

“The Prime Minister has said she wants to help those who are just managing. This tax impacts hardest on those least able to afford it and often in greatest need of the protection that insurance provides.

“Any further hike in insurance premium tax could not only affect millions of people directly in their pocket, but result in some people reducing or dropping their insurance cover completely.”

For Patricia Mock, personal tax expert at Deloitte, Hammond could use the Autumn Statement to make good on the Tory Party’s pledge to increase the amount people can earn before they start paying tax.

However, while this would give those in work a small boost to their earnings, the cost to the Government may be deemed too high to implement at this stage.

“The Conservative manifesto commitment was to increase the personal allowance and higher rate threshold to £12,500 and £50,000 respectively by 2020,” Mock said.

“Increasing the personal allowance a further £500 in 2017/18 might cost around £3.5bn and increasing the basic rate limit rate a further £4,500 to reach the higher rate threshold of £50,000 might cost around £4bn.”

As the Scottish Government now has responsibility for income tax north of the Border such changes would be moot for those living in Scotland. But with the Scottish Budget due to be announced on December 15, Hammond’s moves will be watched closely in Holyrood.