The economic growth outlook has also been pared back, Chalmers said as he delivered a ministerial statement to federal parliament.

The Treasurer painted a picture of an economy with more subdued growth as consumers snapped their wallets shut to confront rising prices and higher interest rates.

“Australians are paying a hefty price for a wasted decade,” he told MPs, as he lashed the opposition over its time in government.

Three months ago, Treasury was forecasting inflation to peak at 4.25 per cent this year.

“It’s already 6.1 per cent through the year to June, and now forecast to peak at 7.75 per cent in the December quarter this year,” Chalmers said.

“The current expectation is that it will get worse this year, moderate next year, and normalise the year after.

“We haven’t reached the peak yet – but we can see it from here.”

Treasury is forecasting inflation to fall to 5.5 per cent by mid-2023 and to 3.5 per cent by the end of next year.

In mid-2024, it is expected to reach 2.75 per cent and be within the Reserve Bank of Australia’s preferred two-to-three per cent target band.

“Inflation will unwind, but not in an instant,” Mr Chalmers said.

“Just as the domestic forces contributing to some of the supply side pressures have been building for the best part of a decade, it will take some time for them to dissipate – but they will.

“In the meantime, higher interest rates, combined with the global slowdown … will impact on Australia’s economic growth.”

Treasury has also slashed its gross domestic product forecasts for 2021/22, 2022/23 and 2023/24 by half a percentage point each.

Growth is now expected to have hit 3.75 per cent in the last financial year. The official outcome for the year will not be released by the Australian Bureau of Statistics until September.

The economy is expected to grow by three per cent this year and by two per cent next year.

“A key part of this weaker growth outlook is due to weaker consumption, reflecting higher inflation and higher interest rates,” Chalmers said.

That view was reflected in official data showing Australian retail sales lost momentum faster than expected last month, with economists attributing the slowdown to rising inflation and interest rates.

A strong uptake in overseas travel and more spending on services may also have had an effect.

Retail turnover was up 0.2 per cent in June, at a record $34.2 billion, its sixth straight monthly rise but also its smallest climb so far this year, the Australian Bureau of Statistics said on Thursday.

The consensus expectations had been for a 0.5 per cent rise.

The treasurer said while the revisions reflected choppy economic waters and slowing global growth, he put much of the blame on the opposition.

He accused the former coalition government of glossing over and burying bad news for political gain.

“That approach has already given our country a wasted decade of missed opportunities and messed up priorities,” he told lower house MPs.

“You (the Australian people) are already paying too much for that in the form of high and rising inflation, falling real wages and a trillion dollars of debt that will take generations to pay off.”

While Chalmers’ statement did not focus on budget forecasts – he is saving that for a new Labor budget in October – it does paint a picture of what Australians can expect when it comes to the bottom line.

“The budget we inherited is bursting with waste and rorts, booby-trapped by expiring measures, and burdened by long-term demographic challenges that come with critical and necessary spending,” he said.