Australians have been warned the budget surplus could be tiny amid cost-of-living pressures and heightened global economic uncertainty with war in Europe and conflict in the Middle East.

A month out from the federal budget, Treasurer Jim Chalmers has said a second surplus is “still our goal” despite a recent hit to revenue from falling iron ore prices and volatility for other key commodities.

The mid-year budget review had forecast a deficit of $1.1 billion for the 2023/24 fiscal year, narrowing from the $13.9 billion forecast in last year’s budget.

The $22.1 billion surplus in 2022/23 was the first in 15 years, despite the previous government promising to be back in black.

“We’d like to have a second one if we can, we’re not there yet … the degree of difficulty for this budget is a bit higher even perhaps than the first two,” Dr Chalmers told ABC’s Insiders on Sunday.

“It’s a bit harder now because of the iron ore price and because of what we expect to see with the softening in the labour market but that’s still our goal,” he said.

The big influences on the budget would be global economic uncertainty, cost‑of‑living pressures, and the fact that Australia’s economy has been slowing, Dr Chalmers said.

He expected inflation to moderate but warned it can “zig and zag” so the budget could not ignore the balance of risks were shifting for the domestic and global economy with conflict in two important parts of the world.

The “made in Australia” budget will include already announced support for local manufacturing and a revamp of the foreign investment regime that will be finalised in coming weeks.

Dr Chalmers said the foreign investment changes were a big economic reform on the scale of the mergers reform announced last week.

“The biggest change to mergers in half a century, combined with our reforms to foreign investment, these are two important parts of our economic reform agenda but not the only parts,” he said.

Cash-strapped voters will also be hoping for some immediate relief from rising cost-of-living pressures when the budget is released on May 14.

This post was originally published on Michael West.