Treasury predictions in the budget, which will be handed down on Tuesday, show inflation dropping to 2.75 per cent by December.
The forecasts also show inflation remaining at 2.75 per cent by the middle of 2025, before a further drop to 2.5 per cent by the end of that year.
The modelling shows inflation falling back to within the Reserve Bank of Australia's (RBA) target range of two to three per cent, almost one year earlier than the bank forecast at its May meeting.
Finance Minister Katy Gallagher says the budget has made progress on inflation, but will continue focusing on alleviating cost-of-living pressures and future economic growth.
"The job isn't done yet," she told the ABC on Monday.
"We're very mindful of the economic circumstances that we're operating in at the moment - there's challenges but opportunities in that as well."
Unemployment, for example, is expected to rise from 3.8 per cent to 4.5 per cent over the next 12 months.
"That's been the discussion about the narrow path - how do you moderate inflation without smashing the economy?" Ms Gallagher said.
Inflation, which stands at 3.6 per cent for the year to the March quarter, was moderating faster than Treasury previously expected, Treasurer Jim Chalmers said.
"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," he said.
Opposition finance spokesperson Jane Hume noted this was a more optimistic outlook than other economists had predicted.
"It's certainly very different from the RBA forecast that was made only six days ago," she told ABC radio.
"I suppose it's really up to the treasurer now to tell us exactly how the government is going to bring inflation back down sooner."
Economist Saul Eslake said it was possible to offer financial relief while winding back inflation.
During the 2023 Budget, for example, energy bill relief, increases in Commonwealth rental assistance and increases in childcare subsidies helped alleviate pressures while pushing down those components of inflation.
"If the government repeats those kinds of measures again in the budget tomorrow night ... that will have a mechanical downward impact on inflation," Mr Eslake told Sky.
He said ensuring Australians cut back on spending was also fundamental to carving the path back towards acceptably low inflation but admitted there weren't many options for addressing the surge in housing inflation.
Dr Chalmers' third budget as treasurer is also set to show a softer outlook for growth in the years ahead, with GDP downgraded.
Real GDP growth is set to be two per cent in 2024/25 and 2.25 per cent in 2025/26, both 0.25 per cent lower than previous Treasury forecasts.
While the forecasts show lower estimates for inflation, the budget papers say there remains "considerable uncertainty around the outlook for the domestic and global economy".
"Inflation is still the big near-term challenge in our economy, which is why the government is doing its bit in the budget," Dr Chalmers said.
– AAP
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