Canberra, Jun 28 (IANS): Australia's Treasurer Jim Chalmers on Wednesday said that no state or territory in the country was immune from economic headwinds, including the challenge from inflation.

In an address,Chalmers said inflation and interest rate increase along with global challenges, will significantly slow the economy, with the growth expected to fall from 3.25 per cent this year to 1.5 per cent next year, reports Xinhua news agency.

Inflation is due to fall from 7 per cent recorded in the March quarter this year to 3.25 per cent in 2023-24, before returning to the Reserve Bank of Australia (RBA)'s target band the year after.

"In the Northern Territory (NT), consumer price index (CPI) reflects these national trends, and you, along with the rest of the country, have been impacted by the response," he said.

"The 400-basis point increase in rates since before the election last year is the most significant tightening cycle the RBA has undertaken since the inflation targeting era began."

Chalmers also said Australia's first budget surplus in over a decade will come in bigger than previously forecast.

The improvement has been driven by low unemployment and high commodity prices resulting in higher tax receipts.

"Today, I can reveal that we're expecting the surplus will be bigger than forecast in May," he said.

"We welcome this because it means delivering on what we've set out to do -- rebuilding our buffers -- and taking more heat out of the economy just as it's needed to combat inflation."

His speech came as data from the Australian Bureau of Statistics (ABS) on Wednesday revealed the rate of inflation fell.

The monthly CPI indicator rose by 5.6 per cent in the 12 months to May this year -- down from 6.8 per cent in April and the smallest increase since April 2022, according to ABS.