According to projections released by the Treasury on Sunday, inflation will fall to 2.75 percent by December and to 2.5 percent by the end of 2025.
The official figures were released ahead of the federal budget for 2024-25, which Treasurer Jim Chalmers will hand down on Tuesday night.
The Treasury projections suggest that inflation will fall back to the Reserve Bank of Australia's target band of 2-3 percent one year earlier than forecast by the bank in its outlook published earlier in May.
The central bank's forecast does not account for unannounced measures included in Chalmer's budget whereas the Treasury's does.
"Inflation is still the big near-term challenge in our economy which is why the government is doing its bit," Chalmers said in a statement on Sunday.
"The budget will put downward pressure on inflation, not upward pressure on inflation. Our budget will be part of the solution to the cost-of-living pressures, not part of the problem."
According to the latest figures from the Australian Bureau of Statistics, inflation was at 3.6 percent in the 12 months to the end of March, down from 4.1 percent in the year to the end of December 2023.
The Treasury figures also downgraded economic growth projections for the next two years, with gross domestic product now expected to grow by 2 percent in the 2024-25 financial year and 2.25 percent in 2025-26, down from 2.25 and 2.5 percent predicted in December forecasts.
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