The big story of Wednesday’s spring statement by the Chancellor will be the impact of inflation – which has soared from almost zero just over a year ago to perhaps 10 per cent in coming months – on living standards and the public finances.

I expect Rishi Sunak to provide limited protection from the ravages of inflation to those on low and middling incomes, probably by increasing universal credit and the threshold for paying national insurance.

But quite how far the Chancellor inflation-proofs the take home pay of low earners will be the most important question he will answer tomorrow.

Either way, such support is likely to cost more than £10 billion – four or five times more than he is likely to spend on another expected measure to ease the cost of living surge, namely knocking 5p off the duty on a litre of petrol.

The paradox is that in the short term at least, inflation that makes all of us poorer will create the illusion of making the public finances seem stronger – a hint of which was already shown in today’s public borrowing figures.

The point is that rising prices have the mechanistic effect of increasing tax revenues, whereas spending by government departments is set in cash terms for the next three years.

That means unless the Chancellor chooses to boost those cash budgets, the projected deficits he faces will fall – though inflation and rising interest rates will combine to force him to pay circa £20 billion a year more in interest on the government’s debts.

But there is something of an illusion to the idea that inflation strengthens the public finances. Because soaring inflation undermines the spending power and living standards of everyone, including public sector workers.

So Sunak and the PM will be under intense pressure to increase the pay of nurses, teachers and police officers by at least the rate of inflation.

And if they deliver those pay rises, there would be less money to spend on clearing the backlog in the NHS or providing remedial teaching to school students whose education was hurt by Covid – unless Sunak were to give departments more cash.

I expect Sunak to commit to precisely nothing in respect of public sector pay tomorrow: for him this will be a political nightmare and battle for the coming months. There is also zero prospect of Sunak postponing the introduction next month of that contentious 1.25 per cent increase in national insurance.

But Sunak’s recent Mais lecture was an exercise in self-branding as both a believer in the power of the private sector to drive prosperity – which he will encourage later this year with enhanced tax breaks on investment and research and development – and a realist about the limits of markets.

So on Wednesday he will devote billions of pounds to creating a limited inflation shield for the poor. But until we can count those billions, we can’t assess whether the protection he’s giving is the least or most we would expect of a humane government.