Former federal treasurer Peter Costello says the Albanese government’s budget is inflationary by almost every measure because it increases spending, deficits and debt.

Mr Costello, who was also the chairman of the Future Fund until February, on Wednesday said Treasurer Jim Chalmers’ third budget, which included a $300 power bill rebate for all households and stage three tax cuts, was stimulatory and would add to inflation, which, in turn, would add pressure to keep interest rates higher for longer.