The peak of the inflationary spike causing a cost-of-living squeeze for households could be behind the Australian economy.
Fresh quarterly inflation figures are due out this week and Treasurer Jim Chalmers says he's hoping price increases will moderate after ramping up last year.
But Dr Chalmers said despite Treasury and the Reserve Bank predicting a December quarter peak, cost-of-living pressures will continue to bite.
He added that relief for households would feature in the budget but the government was being careful to not add fuel to the inflation fire.
"We'll know before long, whether or not that was the peak or not," he told reporters in Brisbane on Sunday.
"The Australian economy will begin to soften a bit this year and that is the inevitable likely consequence of higher interest rates and a slowing global economy.
"That's why our economic plan is cost-of-living relief in a responsible way and growing the economy without adding to these inflationary pressures."
The predictions came off the back of shipping and housing costs dropping quicker than anticipated, although a turbulent Chinese economy is adding to Australia's economic woes.
"The Chinese economy will obviously have a big impact on the performance of our own economy," Dr Chalmers said.
"We do expect it to rebound relatively strongly and relatively quickly, but it's in a pretty weak position right now."
Opposition Leader Peter Dutton said the government had underestimated the cost-of-living pressures that businesses and workers were experiencing.
He said Australians will face a tougher 2023 due to Labor's intervention in the energy market.
"The treasurer is trying to put all sorts of spin on what will be in the May budget," he told Sky News.
"They're making decisions, including in the energy policy area, that will have upward pressure on bills and will introduce a lack of reliability within the system.
"That's going to be a disaster for small businesses and manufacturing who will just take their manufacturing offshore."
But Dr Chalmers insists the decision to cap coal and gas prices at the end of last year was a necessary intervention by the government.
Treasury analysis conducted using data from the Australian Stock Exchange before and after the market intervention found that wholesale electricity prices should rise by less than initially predicted.
Updated Treasury forecasts have prices in Queensland 44 per cent lower than earlier predicted, while they are predicted to be 38 per cent lower in NSW, 32 per cent lower in South Australia and 29 per cent lower in Victoria.