Treasurer Jim Chalmers delivered his highly anticipated economic update in parliament on Thursday, which showed the nation's surging inflation rate was set to peak at 7.75 per cent in the December quarter before starting to subside next year.

Dr Chalmers revealed the forecast for wages growth had been revised up to 3.75 per cent for the next two years, which would be the fastest rate in a decade if it eventuated.

But in a blow for workers, that won't translate into a real pay rise because of the skyrocketing inflation rate.

"The harsh truth is - households won't feel the benefits of higher wages while inflation eats up wage increases, and then some," Dr Chalmers said.

"Real wages growth relies on moderating inflation and getting wages moving again.

"Based on current forecasts, real wages are expected to start growing again in 2023-24."

Dr Chalmers' speech stepped through the international and domestic headwinds which were battering the Australian economy and putting pressure on the federal budget.

The Treasurer acknowledged that international forces such including Russia's invasion of Ukraine and China's COVID-suppression tactics were contributing to the tough economic conditions.

But he pinned most of the blame for the cost-of-living crisis on the former Coalition government, accusing it of failing to properly invest in renewables, skills, training and local manufacturing during its near decade in power.

"Australians are paying a hefty price for a wasted decade," he said.

"There is no use tiptoeing around the pressure that people are under. Nine years of mess cannot be cleaned up in nine weeks. It will take time."

The Reserve Bank is tipped to raise interest rates for the third consecutive month after next week's board meeting, creating further hip-pocket pain for borrowers.

Dr Chalmers said the "medicine" to counter soaring inflation - higher interest rates - was tough on households, which were now having to make difficult decisions about which items they could afford.

"There's no point pretending these rate rises don't hurt - they do and they will," he said.

"Every extra dollar Australians have to find to service the mortgage is a dollar that can't help meet the high costs of other essentials."

Dr Chalmers said Labor had inherited a budget with a trillion dollars of debt and bursting with "waste and rorts". The budget bottom line was also under pressure from spending on health, the NDIS and the cost of servicing the huge government debt.

Opposition treasury spokesman Angus Taylor accused the treasurer of painting a picture of the economic environment, rather than setting out a clear plan to fix it.

Mr Taylor said Dr Chalmers has set three tests for himself against which he would be judged: what happened with power prices, apprentices and real wages.

"Right now though, the Treasurer sounds like a commentator, not a Treasurer," he said in response to Dr Chalmers' speech.

"Like a forecaster not a leader."