Fresh inflation figures out of New Zealand sound a warning that the worst of price and rate rises may still be yet to come, says Australia's federal Treasurer as he warns Australians to brace for next week's "confronting" budget update.

At a press conference in Canberra, Mr Chalmers confirmed that he would deliver a "confronting" ministerial statement on the economy and budget outlook next Thursday, July 28.

He warned that there would be revisions to the previous government's pre-election budget forecasts on economic growth, inflation and, of course, interest rates that would significantly affect the budget outlook.

"The world economy is [in] a difficult, if not dangerous, place right now," he said.

"That combination of inflation and rising interest rates and slowing growth, and food and energy insecurity, combined with the amount of debt that countries have racked up is a cause for concern in the global community.

"We have inherited the trickiest set of economic conditions that a new government has inherited in memory."

One of those difficulties is the sudden and rapid increase in interest rates across much of the world, which are now set to dramatically increase borrowing costs on Australian Government debt, which is closing in on a trillion dollars.

Mr Chalmers said the rise in interest payments would ramp up quickly over the next decade.

"More than a billion dollars this year, more than $5 billion in the last year of the [forward estimates], $13 billion accumulated over the [forward estimates], $18 billion in 2032-33, so these are not small amounts of money," he told reporters.

Inflation, rates set to keep rising

And there a no signs those rapid rate increases will end soon.

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The latest second-quarter inflation data from New Zealand showed bigger price increases than economists expected, at 7.3 per cent over the past year, ahead of the 7 per cent predicted by the Reserve Bank of New Zealand.

ANZ's New Zealand economics team now expects the RBNZ to raise interest rates faster and higher.

"We have changed our [overnight cash rate] call and now expect the run of 50-basis-point hikes to continue through to November, meaning an OCR endpoint of 4 per cent rather than 3.5 per cent," wrote Finn Robinson Sharon Zollner.

New Zealand's central bank has already been well ahead of the Reserve Bank of Australia in raising interest rates, with its latest move last week taking its official benchmark rate to 2.5 per cent, versus the RBA's 1.35 per cent.

However, New Zealand's inflation rate, of 7.3 per cent, is likely to be higher than Australia's — which will be out on Wednesday next week — with Westpac forecasting a 6.1 per cent annual price rise on this side of the ditch.

The gap between the two nations' unemployment rates has narrowed, meanwhile, after much-better-than-expected jobless numbers Down Under last week.

New Zealand's unemployment rate is 3.2 per cent, while Australia's is now 3.5 per cent.

Australia has recently lagged around half a year or so behind New Zealand in many economic indicators, for example house prices, which have only just started falling here but are already down around 6 per cent over there.

A similar pattern seems set to occur with inflation and interest rates, with some economists now calling a possible peak in New Zealand's CPI, while Westpac has upgraded its Australian inflation forecast and predicts that surging construction and food costs will push annual price rises here to a peak of 7.2 per cent by the end of this year.

As with New Zealand, that has caused some analysts to raise the possibility that the RBA may lift the cash rate by 75 basis points in a fortnight's time, not just the 50 basis points that is currently widely tipped.

CBA is still tipping a 50-basis-point rate rise next month, but now expects that to be followed up with a fourth consecutive oversized rate hike in September before a final rate rise in November to take Australia's cash rate to 2.6 per cent — just above where New Zealand's is now.

Rate cuts possible next year

However, it expects that the RBA will be forced to stop there.

"Consumers who are concerned about the economic outlook invariably spend less, though not necessarily straight away," noted the bank's head of Australian economics Gareth Aird.

"The lags, however, between changes in sentiment and spending decisions are not particularly long. And there is evidence in our internal credit and debit card data that spending momentum has cooled considerably."

Mr Aird also offers a ray of hope for mortgage borrowers struggling with repayments or worried about what will happen when their current low-rate, fixed loan expires over the next year or two.

"A contractionary policy setting means below-trend growth in 2023, and a subsequent lift in the unemployment rate, unless there is a new round of fiscal stimulus (not out base case)," he continued.