RBA governor Michele Bullock has urged federal and state governments not to stoke inflation with big-spending election promises and warned another interest rate rise was still a possibility as the central bank conceded it had underestimated public spending on services such as the National Disability Insurance Scheme.

A string of big spending announcements including in the lead-up to the Queensland election last month have pushed government spending to a record share of the economy. At the same time, Australia has recorded the second-highest underlying inflation rate of any advanced economy, according to RBA analysis released in its quarterly forecast update on Tuesday.