Campaigners have urged the government to halt any increase in the TV licence fee until the BBC agrees to make it free for everyone over 75.
The fee has been frozen at £159 for two years but will grow due to inflation for four years beginning next spring.
If it is increased to meet wider price increases, this will add over £15 to the cost next year, bringing it to £173.30, the largest increase in 40 years.
The specific mechanism for calculating inflation-linked hikes could be decided by the end of this week.
Ministers are also expected to announce a formal review of licencing fee funding, which has been deemed unsustainable by Whitehall.
Rishi Sunak, in a clear indication that the government may interfere to avoid or minimise the hike, said the BBC should be “realistic” about what it can expect people to pay.
He stated that all government agencies should “cut their cloth accordingly.”
The licence fee was free to the over-75s until the BBC axed the concession in 2020.
Downing Street said it would not comment on specifics of the review, but that a decision was close.
“You can expect a decision on the licence fee very soon,” stated the Prime Minister’s official spokeswoman. We have agreed to conducting that review prior to the charter’s expiration in 2027.
“That will include the potential to include alternative ways to ensure the BBC remains appropriately funded.”