Government borrowing was lower than expected last month, despite debt interest payments hitting a record for July.

Borrowing – the difference between spending and tax income – was £4.3bn, official figures show.

That was £3.4bn more than a year ago and the fifth-highest figure for July since monthly records began in 1993.

The figure was below forecasts of about £5bn, as self assessment income tax revenues rose.

Some of the interest that the government pays on its debt is linked to the Retail Prices Index measure of inflation, which has been high this year although the rate has fallen in recent months.

Borrowing for the financial year to date has now reached £56.6bn, according to the ONS. That is higher than in the same four-month period last year, but lower than the amount predicted by the government’s independent forecaster, the Office for Budget Responsibility (OBR), in March.

Total net debt had reached £2.6bn by the end of July, the ONS said, which was about 98.5% of the UK’s gross domestic product (GDP) – the value of all the goods and services produced in the UK in a year.

There has been speculation that the government could seek to announce tax cuts in the Autumn Statement ahead of the next general election, which is expected in 2024.

Commenting on the latest borrowing figures, Mr Hunt said: “As inflation slows, it’s vital that we don’t alter our course and continue to act responsibly with the public finances.

“Only by sticking to our plan will we halve inflation, grow the economy and reduce debt.”

Although July’s borrowing figures were better than expected, Ruth Gregory, deputy chief UK economist at Capital Economics, said that she thought Mr Hunt would “struggle to unveil a large package of permanent tax cuts in the Autumn Statement”.

Ms Gregory added this was because the economy was expected to weaken later this year, which would hit tax revenues.

In addition, expectations of how high interest rates will go have increased since the OBR made its forecasts in March, and that will increase forecasts for the amount spent on debt interest payments.