The "bread and butter" budget promised by the Albanese government may leave stretched households disappointed but there's a reason for keeping a lid on cost-of-living relief.
That's because the Albanese government will deliver its first budget against a backdrop of runaway inflation that's wreaking economic havoc around the world.
Domestically, headline inflation is sitting at 6.1 per cent and is still well off where it's expected to peak.
Treasury's economic forecasts released ahead of the budget show inflation peaking at 7.75 per cent - unchanged from earlier predictions - but sticking around for longer due to high energy prices and the latest round of floods.
The Reserve Bank of Australia's main job is to keep inflation within a two to three per cent target band, and the only real tool at its disposal is lifting interest rates to make people poorer and reduce spending.
That's why the RBA, like other central banks around the world, has been lifting rates aggressively.
It's since shifted to a slower pace of tightening, which suggests its rate hiking cycle is coming to an end, but has foreshadowed more rate hikes to come.
The RBA is working hard to pull off a "soft landing" - that is, a slowdown in the economy to rein in inflation without causing a full-blown recession.
Most economists - and the federal treasurer - are optimistic Australia can make a gentle landing.
In July, Treasury expected GDP to grow by two per cent next financial year, with the budget to reveal the department's most up-to-date forecasts for growth.
Similarly, the IMF is predicting the economy to grow by 3.8 per cent this year and then the growth rate to halve to 1.9 per cent the year after.
And rising interest rates are yet to make much of a dent in record-low unemployment, which held firm at 3.5 per cent in September despite fewer-than-expected new jobs being added to the economy.
But rising interest rates and the corresponding global downturn is expected to take a toll on the labour market, with Treasury's budget forecast for the jobless rate revised upwards from July estimates to peak at 4.5 per cent next financial year.
The department previously expected the jobless rate to peak at 4.25 per cent.
In promising news for workers, the tight labour market is starting to push up wages, with the wage price index sitting at 2.6 per cent for the June quarter.
However, wages are still falling well behind inflation.
In terms of engineering a soft landing, there are a few factors in play.
The RBA needs to be careful not to lift rates too hard and fast and cause too much pain in the economy.
On the other hand, it risks not lifting rates high and fast enough and letting inflation surge out of control.
For the treasurer, handing down a budget in a high-inflation environment is no easy task.
While tempting, Treasurer Jim Chalmers says generous spending measures to ease cost of living pressures will only fuel inflation.
That's largely why households can expect a responsible, bread and butter budget next week.
But Dr Chalmers says the budget will contain some targeted cost of living relief, such as cheaper medicine and child care, which were measures promised during the election.
