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Inflation has surged to 7.3 per cent annually in the September quarter, exceeding market expectations and likely dragging out the interest rate hiking cycle.

Inflation over the quarter hit 1.8 per cent, matching growth from the quarter before.

Underlying inflation - the figure the central bank pays most attention to when it makes its interest rate decisions - hit 6.1 per cent in the year to September.

Construction costs largely drove the lift in the CPI in September, according to the Australian Bureau of Statistics.

"Labour shortages in the house construction industry, leading to rises in labour costs, contributed to the rise in new dwellings this quarter," the ABS's Michelle Marquardt said.

The latest consumer price index figures follow the Albanese government's first budget, which was broadly applauded for not pumping more stimulus into the economy and driving inflation higher.

Treasury also released its latest forecasts for inflation in the budget, with inflation expected to peak at 7.75 per cent.

But the latest round of floods and soaring energy prices are expected to keep inflation hovering around its peak for longer.

Floods in Tasmania, NSW and Victoria are predicted to push fruit and vegetable prices up by eight per cent over the next two quarters.

Power prices are expected to lift by 56 per cent over the next two years, according to the budget papers, while gas prices are also predicted to increase sharply.

Treasurer Jim Chalmers acknowledged the role of high energy prices in the 7.3 per cent inflation read for the September quarter, but said inflation was still expected to peak at 7.75 per cent.

"We still expect inflation to peak around the same level towards the end of the year," he told reporters in Canberra.

"Petrol prices have come off a bit quicker, but groceries and electricity prices are becoming a bigger component."

AMP Capital's Diana Mousina said the latest inflation figures proved inflation was high across the board.

"Goods prices inflation remains the main driver of higher prices, with goods inflation up by 9.6 per cent over the year while services prices is 5.1 per cent higher," she said.

Ms Mousina expects to see goods inflation come down in 2023, but worries high goods inflation may have seeped into services prices.

"Services inflation at 5.1 per cent over the year is far too high, especially as wages growth is expected to rise from here," she said.

The latest evidence of stickier-than-expected inflation has prompted AMP Capital economists and several of their counterparts to revise their predictions for future interest rate hikes.

Ms Mousina and her colleagues expect to see an extra hike of 0.25 per cent hike in December to take the cash rate peak to 3.1 per cent by the end of the year.

NAB economists have added another two 25 basis point cash rate hikes in February and March to their forecast.

"In these circumstances, the RBA will need to move monetary policy into more clearly restrictive territory to ensure inflation returns to target, and as such we have revised up our terminal rate expectation to 3.6 per cent from 3.1 per cent," NAB's Alan Oster said.

"We see 25bp moves as likely, but a 50bp rise in November is possible, given today's CPI print," he added.

The RBA board will meet next Tuesday to make its November cash rate decision.

© AAP 2022

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Hackers behind the massive Medibank data breach had access to the personal data of all four million of the health insurer's customers.

But the number of affected people is set to grow substantially, with Medibank confirming all customers of its ahm offshoot and all international student customers also had their data breached.

The insurer is working through the details of each individual customer so each person knows what type of information the hackers accessed, including personal and health claims data.

"We believe that the scale of stolen customer data will be greater and we expect that the number of affected customers could grow substantially," Medibank chief executive David Koczkar said.

"I apologise unreservedly to our customers. This is a terrible crime - this is a crime designed to cause maximum harm to the most vulnerable members of our community."

Medibank has announced a support package for those affected that includes financial backing and specialist identity protection.

It warned customers to be on alert for any suspicious messages via email, text or phone call.

The stock exchange-listed Medibank, which briefed its investors on Wednesday, doesn't have cyber insurance.

It estimates the hack will result in a $25 million to $35 million pre-tax hit to its first half fiscal 2023 earnings.

The Medibank issue is the second high-profile hacking in weeks after Optus suffered a huge data breach last month.

Cyber Security Minister Clare O'Neil was asked about the Medibank hack in parliament on Tuesday, saying the government's best people were on the job.

"Australians who are struggling with mental health conditions, drug and alcohol addiction or diseases that carry some shame or embarrassment are entitled to keep that information private and confidential, and for a cybercriminal to hang this over the heads of Australians is a dog act," she said.

"It is scum-of-the-earth, lowest-of-the-low territory."

The government will introduce new legislation to parliament to massively increases penalties for companies that don't properly protect sensitive data.

Fines will rise to whichever is greater - $50 million, 30 per cent of the company's turnover in the relevant period or three times the value of any benefit gained from the stolen data.

The laws would also boost the Australian Information Commissioner's powers to resolve breaches and increase information sharing with the Australian Communications and Media Authority.

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Hackers behind the massive Medibank data breach had access to the personal data of all four million of the health insurer's customers.

The number of affected people is set to grow substantially, with Medibank confirming all customers along with offshoot ahm and international student customers had their data breached.

They're working through each individual customer so each person knows what information the hackers accessed.

"We believe that the scale of stolen customer data will be greater and we expect that the number of affected customers could grow substantially," Medibank chief executive David Koczkar said.

"I apologise unreservedly to our customers. This is a terrible crime - this is a crime designed to cause maximum harm to the most vulnerable members of our community."

Medibank has announced a support package for those affected that includes financial backing and specialist identity protection.

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Australians are facing a tough couple of years after the Albanese government's first budget warned power bills will rise and real wages will fall.

Households are looking at a spike in prices, with electricity bills forecast to rise by an average of 20 per cent this year and by 30 per cent in 2023/24.

Gas prices could rise by 20 per cent in both this financial year and the next, according to Treasury.

Wages growth isn't expected to outstrip inflation until at least mid-2024 and the government said measures like childcare and paid parental leave will help some families struggling with some cost of living issues.

Treasurer Jim Chalmers maintained Labor had delivered "a budget for the times".

Dr Chalmers said Labor was exercising restraint in cost of living relief to avoid adding to rising inflation, which is tipped to peak at 7.75 per cent in the December quarter of 2022.

"We've got our fair share of challenges right now. What we were able to do was provide some cost of living relief in a way that doesn't push up inflation," he told ABC TV on Wednesday.

While the budget papers point to a better-than-expected deficit for 2022/23 of $36.9 billion, the deficit is on track to blow out to $51.3 billion in 2024/25.

The economy is forecast to grow by 3.25 per cent this financial year, but growth will slow sharply to 1.5 per cent in the next financial year.

Prime Minister Anthony Albanese rejected suggestions the government didn't take tough decisions in its first budget, after banking almost all of the recent extra revenue driven by higher commodity prices.

"Putting 99 per cent of the revenue gain back into paying off debt is a good thing for us to do, a tough thing for us to do," he told the Nine's Today program.

"We know people are doing it tough out there. But had we had a cash splash, that would have just added to inflation and would have been counterproductive."

But NSW Treasurer Matt Kean said the government needed to give more money back to the community because the budget was propped up by soaring coal and gas prices.

"I'm asking them to return some of that to struggling households," he told ABC radio.

Mr Albanese said he stood by his election pledge to cut electricity prices by $275 a year.

Dr Chalmers said the government would consider regulatory steps to ease power prices while acknowledging global factors like the war in Ukraine were adding to the pressure.

Assistant Treasurer Stephen Jones said spending needed to be targeted towards families doing it toughest.

"So childcare, aged care, medicines, reduction and a new housing program to deal with rental affordability," he told AAP.

"We can't do everything, which is why we've targeted our support at those parts of the community that are the most in need."

Childcare will be made cheaper for 1.26 million people, while more than $530 million will be spent expanding paid parental leave to 26 weeks by 2026.

An extra $787 million has also been set aside to reduce co-payments for the Pharmaceutical Benefits Scheme, while money has been allocated to support pay rises for low-paid workers.

A national housing accord has set a target of one million new homes to be built over the next five years.

The NDIS will also be boosted by an extra $8.8 billion over the next four years, while $235 million will be spent on urgent care clinics and $750 million to strengthen Medicare.

© AAP 2022