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Chalmers makes bold inflation prediction

Federal Treasurer Jim Chalmers says the government is predicting inflation will come back into the Reserve Bank of Australia's (RBA) target range of 2-3% by Christmas and will be sitting at around 2.75%.

The prediction is at odds with the RBA's modelling which suggested inflation would still be sitting above the target range at 3.2% by June 2025.

Chalmers said the reason the government is expecting inflation to fall more quickly is because their modelling takes into account the measures they plan to introduce in the Federal Budget.

"That'll be the difference, frankly, between the Reserve Bank's forecasts and our forecasts, just an issue of timing - ours has the Budget in it, and theirs weren't able to," Chalmers said.

"But speaking about inflation is a good opportunity to remind people that we know people are still under pressure, but we have made pretty substantial progress in this inflation fight. It's less than half what its peak was in 2022, but we know we've got more to do. And you'll see that in the Budget."

Speaking ahead of the Federal Budget, Chalmers said the government would be introducing a range of measures to reduce the cost-of-living while not adding the inflation.

"I'm optimistic about the future of our economy and our country. But there's a really sharp near-term focus on the inflation fight in this Budget. It's the most important thing that we can focus on in the near term, but we need to remember that we've got a growth challenge as well, and so we'll invest in the future," Chalmers said.

"The Budget will be a responsible budget, it will ease cost-of-living pressures and it will invest in a Future Made in Australia. And we won't be slashing and burning in the Budget because we know people are under pressure and the economy is weak. So, a focus on inflation - a primary focus on inflation, but not a sole focus."

Read more: InflationFederal BudgetFederal TreasurerJim ChalmersReserve Bank of Australia