"The fault lies with a decade of wasted opportunities, wrong priorities and wilful neglect that Australians are now all paying for."
Inflation would rise to nearly 8 per cent by the end of the year rising to 7.75 per cent in the December quarter.
"The current expectation is that it will get worse this year. We haven't reached the peak yet," he said.
However, it will then start to fall back in line with more normal target ranges.
"Treasury expects headline inflation at 5.5 per cent by the middle of next year, 3.5 per cent by the end of 2023, and normal rates of 2.75 per cent by June 2024. That is back inside the RBA's target range."
The previous government had forecast a peak of 4.25 per cent by June, before slowly dropping again.
Dr Chalmers accused the Morrison Government of leaving behind "a mess".
"Falling real wages, and A$1 trillion of debt that will take generations to pay off," he said.
"Nine years of mass cannot be cleaned up in nine weeks. It will take time. Australians know that as well.
"This time of great challenge for the country is also a time of great opportunity."
The Treasurer warned this morning that inflation is forecast to hit 7 per cent later this year warning the global economy faced "a perilous path."
Earlier in the day, Dr Chalmers said voters wanted "real talk" and that he wasn't going to "sugar-coat" the challenges the economy is facing.
Speaking on Channel 7's Sunrise program, host David Koch asked the Treasurer: "Are we headed for an economic recession?".
"That's not our expectation,'' the Treasurer replied.
"What I'd like to do is bring people into our confidence to not tiptoe around these issues, including the inflation challenge that you were talking about a moment ago.
"We expect inflation north of 7 per cent by the end of the year, but then we expect it to moderate after that, but there will be a difficult period for many Australians as we try to deal together with these pretty extreme cost of living pressures."
Dr Chalmers also told Channel 9's Today Show a recession was not likely, despite the threat of rising interest rates, cuts to real wages and rising inflation.
"That's not the Treasury's expectation,'' the Treasurer told the Today Show.
"But people have legitimate concerns about slowing growth in our economy."
Dr Chalmers also warned motorists he does not support the extension of the temporary fuel excise cut when it expires in September.
"I think that will be too difficult to do to be perfectly upfront with you and all of your viewers,'' the Treasurer told Sunrise.
"We said before the election and after the election that it's very expensive to extend the temporary price relief at the bowser forever, some billions of dollars."
Outlining the tough budget circumstances the new Albanese Government faces today, Dr Chalmers will reveal Australia faces an inflation rate not seen since the 1980s.
Dr Chalmers said the coming months would be tough but he expected things to get better.
"I would rather be blunt and upfront about these economic challenges,'' he said.
"I don't want to sugar coat it or tiptoe around it."
The Treasurer will confirm another half a percentage cut to growth forecasts for the last financial year, for this financial year, and for the next financial year.
"It's expected that real GDP grew by 3.75 per cent in 2021-22, instead of 4.25 per cent as was estimated pre-election,'' he said.
"The pre-election forecast for GDP growth in 2022-23 was 3.5 per cent. This has now been revised down to 3 per cent growth.
"And growth is expected to slow further in 2023-24, at 2 per cent – down from the 2.5 per cent previously predicted."
Australia's inflation rate hit 6.1 per cent on Wednesday – slightly less than forecast – but still a big hit to the cost of living.
The figure makes it less likely that the Reserve Bank (RBA) will raise the official cash rate by 75 basis points in August. But it's still expected to increase by 50 basis points.
