Barking and Dagenham Council is forecasting it will overspend by more than £16million in this financial year.
The authority's budget for 2022-23 was discussed at a cabinet meeting on Tuesday (September 20).
A council report said the forecasted outturn position for its general fund at the end of the financial year is £199.3m - £16.3m higher than the £183m budget.
The document described the predicted level of overspend as "significant", adding: "It is driven by significant cost pressures such as the potential local government pay award and the increasing costs of social care."
According to the authority, there are rising pressures borne from inflation and that some of the extra pressures have been driven by the Covid pandemic.
"As time has passed, some of the additional costs have now become the
“new normal” and it is becoming increasingly hard to draw a sharp distinction between Covid costs and business as usual," the report said.
Cllr Maureen Worby presented the report on behalf of Dominic Twomey, cabinet member for finance.
She told the meeting: "It's not a very good story at this present point in time. I think we do need to acknowledge the pressure on all of our departments around spending.
"We'll have to keep on top of it month-by-month."
But Philip Gregory, strategic director for finance and investment, said some other councils are "in more perilous positions" than Barking and Dagenham.
He also vowed the council will "narrow down" the forecast during the course of the year.
Mr Gregory told councillors: "It's really a flag to say we need to start taking action now to control costs."
The report said the forecasted overspend can be fully met from the council's budget support reserve.
But it added: "However, this would reduce the council’s ability to absorb further financial risks or support new investment in transformation in future years."
The council has also reduced its housing revenue account (HRA) capital programme budget by £4.4m for 2022-23.
This takes into account "increased cost pressures in repairs", according to the report.
Cabinet members approved the amended HRA budget and noted the revenue outturn forecast for 2022-23.
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