Rishi Sunak signalled he is “confident” his administration will be able to cut taxes before the next election.
But the Prime Minister said it remained the “right economic policy” to focus on delivering his pledge of halving inflation by the end of the year.
The British leader included the commitment as one of his five promises to the electorate during a speech in January.
Mr Sunak, speaking after his artificial intelligence address on Thursday, said: “As we bring inflation down, then is the time to look forward and of course I want to deliver a lower tax economy for the country.
“And I’m confident that we will, but first we have to make sure that inflation is brought down.”
There has been clamour from the right-wing of his Conservative back benches to introduce tax cuts before the nation goes to the polls to elect the next Westminster government.
A host of Tory MPs, including former business secretary Sir Jacob Rees-Mogg, have signed-up to a pledge not to vote for Chancellor Jeremy Hunt’s autumn statement next month if it increases the overall tax burden on the UK.
A general election is due to be held before January 2025, with speculation over when Conservative leader Mr Sunak will decide to go to the country.
A glitzy promotional video published by No 10 on Wednesday to mark a year since Mr Sunak came to office increased speculation that a general election could be called next autumn.
The 46-second clip, published on the Downing Street YouTube channel, offers a rapid run through of Mr Sunak’s policy priorities over the last 12 months.
It asks viewers: “So what can a country achieve in 52 weeks? Watch this space.”
A fresh electoral test for the Government could come far sooner than autumn 2024, with the looming prospect of another by-election.
The Commons on Wednesday approved a six-week suspension for Peter Bone, the MP for Wellingborough, after an independent investigation upheld counts of bullying and sexual misconduct against him relating to a staff member.
A recall petition will be held which will trigger a by-election if signed by 10% of voters in his Northamptonshire constituency.
The 18,500 majority Mr Bone, who was stripped of the Tory whip before his suspension, secured in 2019 is less than the majorities overturned by Labour during the Tamworth and Mid Bedfordshire by-elections last week.
The Tories continue to be almost 20 points behind Labour in most opinion polls.
Asked whether he would look to introduce tax cuts in a bid to reverse Tory electoral fortunes, Mr Sunak said: “I’ve always been clear that of course I want to cut people’s taxes — I’m a Conservative, I believe in doing that.
“But the priority when I became Prime Minister was to bring inflation down.
“And as I said then, the biggest tax cut we can deliver for the country is to halve inflation because it is inflation that makes people poorer, pushes up the prices of things, eats into your savings.
“And that is very much following in the tradition of Margaret Thatcher and Nigel Lawson, and I believe that is the right economic policy.”
Inflation currently stands at 6.7%, with figures published in November expected to show a significant fall, mainly as a result of a reduction in the energy price cap.
Mr Sunak needs inflation to fall to 5.3% before the year is out in order to meet his target.