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Treasurer Jim Chalmers has admitted wages are unlikely to keep up with inflation in the short term, warning of tough economic times ahead for Australians.
As official inflation rose a point over the quarter to 6.1 per cent, Dr Chalmers said it would likely get higher in coming months.
Dr Chalmers will deliver what he described as a "confronting" economic statement to parliament on Thursday, ahead of the October budget.
It will contain updates on inflation, wages, unemployment, economic growth and other key figures.
He said inflation would be revised up "substantially" with growth revised down, as well as point to a short-term lag in wages.
"The idea that we would be forecasting wages growth that keeps up with (rising inflation), I think, would not be credible in the near term," Dr Chalmers told reporters in Canberra on Wednesday.
"My expectation is that there will be real wages growth this term of parliament. It has proven particularly tricky to forecast wages growth in the last little while."
The Fair Work Commission recently approved a rise in the minimum wage of 5.2 per cent, largely in line with inflation levels at the time.
Dr Chalmers said while the figures would make for difficult reading, people needed to know the state of finances, ahead of the federal budget in October.
"I wanted to make sure that Australians understood and understand the circumstances as we expect them to be over the coming months and years," he said.
The treasurer foreshadowed a tighter federal budget due to large levels of government debt and tougher economic conditions, as the cost of living continues to rise.
While he attempted to curb expectations about government measures that may be included in the budget due to fiscal pressures, he said housing would be a key focus of the Albanese government's first economic blueprint.
"Some of our most substantial policies you'll see budgeted for in October are around housing, whether it's help to buy, whether it's the housing future fund," he said.
"We've made housing a big priority, because it's a big part of the inflation challenge."
Dr Chalmers also indicated it would be unlikely the petrol excise cut would be extended once the six-month reduction runs out.
"During this cost of living crisis, it is not possible with our budget constraints to fund every good idea that people might have about cost of living relief," Dr Chalmers said.
"We need to tread a pretty careful path here when it comes to budget ... we need to make sure that everything we do ticks more than one box."
Shadow treasurer Angus Taylor said the government needed to unveil "really strong cost of living plans".
"We don't need forecasts and context, we need urgent action," he told reporters in Canberra.