Australia's upcoming federal budget anticipates inflation to drop within the Reserve Bank's target range of 2%-3% by year-end, surpassing the bank's own predictions.

Treasurer Jim Chalmers signals positive budget news, with faster-than-expected reduction in inflation and provisions for financial relief targeting families and middle-income earners.

The budget will lower growth expectations due to global and domestic economic pressures, revising down the real GDP growth forecasts.

Strategies to balance economic growth and inflation include indirect support for income recipients, extending energy rebates, and introducing tax cuts without excessive spending.

Opposition parties propose further tax reforms to combat inflation, with the Liberal Party focusing on small business incentives for investment.

Economists call for fiscal discipline to maintain a tight fiscal envelope, even as the budget plans for tax relief and incentives for small- and medium-sized businesses.

The government's budget is set to reveal deficits from 2024-25 after a period of surpluses, with additional spending on the 'Future Made in Australia' policy.