Millions of Australians will get a Centrelink cash increase tomorrow.

Jobseeker recipients aged over 22 and who do not have children will get another $25.70 a fortnight, while couples will be given an extra $23.40 from September 20.

The Parenting Payment will also increase, with singles receiving $35.20 more a fortnight and couples $23.40.

It marks the most significant increase for allowances in three decades, with pensions also set to get their largest boost to indexation in 12 years.

Some 4.7million people will benefit from the increase as inflation continues to grow with the rate at 6.1 per cent and likely to rise to 7.75 per cent by the end of the year.

The Age and Disability Support Pensions and Carer Payment will increase drastically with singles receiving $38.90 more a fortnight and couples $58.80.

The maximum rate of a pension will increase with singles receiving $1,026.50 a fortnight and couples getting $1,547.60.

Treasurer Jim Chalmers said the increases were crucial to ease cost of living pressures.

‘That’s why they’re indexed twice a year, and every little bit helps,’ he said.

‘This indexation will be particularly big this month, because inflation is particularly challenging.’

The consumer price index in the June quarter soared at the steepest pace since mid-2001, with prices continuing to rise for everyday Australians

A tight rental vacancy market and higher power prices prompted housing costs to surge by nine per cent in the year to June 30.

Transport costs went up by 13.1 per cent while food prices increased by 5.9 per cent.

Mr Chalmers admitted that ‘times will still be tough’ for a lot of people.

‘And we know that it won’t solve every problem for everybody, but it’s important that we try and make sure that those payments keep up,’ he said.

‘That’s what the indexation is about. It will be welcome even as we acknowledge that times will still be tough for a lot of people.’

Environment and water minister Tanya Plibersek said the increase was more good news for pensioners after it was revealed at the Jobs Summit last week they could earn another $4,000 without it affecting their payments from Centrelink.

‘It means they can earn a bit of extra money on the side. It’s also important for the economy because we’ve seen skills shortages in so many areas,’ she told Sunrise.

‘If people can go back and do a bit of work and relieve some of those skills shortages, that’s good for employers too.’

Australian Council of Social Service acting chief executive Edwina MacDonald said more money was needed to help recipients.

‘It’s really just a drop in the ocean at this point and as the non-discretionary inflation is higher than the CPI, they are still going backwards in terms of what they can afford to buy at the moment,’ she said.

‘So, currently jobseeker is at $46 a day, youth allowance is at $38 a day and what we need in order to bring it up to the poverty line, is to bring it up to at least $70 a day.’

The increase comes with cost of living set to increase further when the temporary fuel excise freeze ends on September 29.

Mr Chalmers has ruled out extending the tax cut that was introduced by former prime minister Scott Morrison.

‘I think Australians understand that we’ve inherited a budget which is heaving with a trillion dollars in Liberal Party debt and that means some difficult decisions including this one.’

Nationals MP Barnaby Joyce said the removal of the fuel excise would just add more pain to families already struggling to make ends meet.

‘Well, we’re seeing a lot of pressures by cost of living, and we know at the end of the month the fuel excise goes and a lot of those increases will be gobbled up just in one item alone – fuel increases,’ he said.

‘We know it’s an inflation period and interest rates will also rise and so real pressures are going on people and they need – unless you want them in poverty, they need to be supported.’