Chalmers has confirmed there will be a larger surplus for the 2022/23 financial year than predicted in last month’s federal budget.

But the treasurer said the first budget surplus for 15 years did not come at the expense of cost-of-living relief measures.

“By getting the budget in much better nick by finding savings … it actually makes it possible from that much stronger foundation to provide the $15 billion of cost-of-living relief that we had in the budget,” he said on Thursday.

Monthly inflation data released on Wednesday showed consumer price rises slowed to 5.6 per cent in the year to May, down from 6.8 per cent in April and easing pressure on the Reserve Bank to continue with interest rate hikes.

Chalmers said the data was welcome, but he accepted people were still finding cost-of-living pressures a big challenge.

“People are still doing it tough, but there’s a very clear trend now when it comes to inflation,” he said.

“It has been coming off quite substantially since its peak around Christmas time.”

The Reserve Bank will be watching retail trade data on Thursday for more evidence of a slowing economy before making a decision on further rate rises.

Economists have pencilled in a 0.1 per cent month-on-month rise when the Australian Bureau of Statistics (ABS) releases its monthly retail sales data along with quarterly retail volumes.

Consumers have proved relatively resilient to economic challenges but Australian Retailers Association chief executive Paul Zahra said the slowdown was well under way, especially for non-essentials.

“Obviously we need to eat, so food is still continuing to perform quite well,” he said.

Surveying by the organisation suggests there will be 400,000 fewer people shopping during the end-of-financial year sales than normal.

Zahra said retailers were discounting by more than usual during the period to stimulate sales.

A separate consumer survey by Manhattan Associates found a third of respondents were holding off or deferring purchases until sales or special deals, while 51 per cent said they had decided to hold off indefinitely.

Zahra said retailers were facing a perfect storm, including lower demand, high costs of doing business, a retail crime wave and a robust reform agenda from the government.

“There’s a collision between this cost-of-living crisis that we’re seeing with the cost-of-doing-business crisis,” he said.

The ABS is also due to release job vacancy data on Thursday.

The Reserve Bank board will meet for the next interest rate decision on Tuesday, with CommSec economists saying the possibility of a further 25 basis point rate hike is “finely balanced”.

-AAP