Households can expect significant additional cost-of-living pressures because of the war in the Middle East, with Jim Chalmers confirming that the government expects inflation to rise beyond 4.5% in Australia.

But the treasurer said he did not expect the economy to fall into recession because of the war sparked by US and Israeli bombings in Iran.

Now at 3.8% and putting pressure on the Reserve Bank to lift interest rates as soon as this week, inflation could peak at the “mid to high fours” according to Treasury modelling, Chalmers said.

Speaking on Sky News on Sunday, he was asked about National Australia Bank forecasts that inflation could peak above 5% in the next quarter.

“We’ve run a couple of scenarios which make it clear on some realistic assumptions about global oil prices and how that would potentially flow through to inflation, and for how long,” he said.

“If we were putting pencils down on those forecasts today, we’d have inflation peaking somewhere between the mid to high fours, which isn’t far off some of those private forecasts.”

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Just how long the conflict continued would be critical to the economy hit, Chalmers said.

But recession – two consecutive quarters of negative economic growth – was not something the federal government was “anticipating or expecting”.

“If you look at the scenarios that Treasury has already run, they expect there to be a hit to growth but not a hit to growth that would deliver, you know, a shrinking economy in the quarters to come,” Chalmers said.

“Again, there are a lot of unknowns, there’s a lot of volatility. There’s a lot of uncertainty that existed even before the dramatic escalation of hostilities in the Middle East a couple of weeks ago.”

The Reserve Bank board, who aim to bring inflation back within the RBA’s 2% to 2% target, will meet this week to consider the cash rate. Economists at the big four banks are tipping an increase, followed by another in May – a decision due days before the 12 May budget.

The Greens leader, Larissa Waters, called on the RBA not to increase interest rates. “A rate rise will not stop the chaos of this illegal war that is driving inflation,” Waters said.

“People are already struggling with price gouging at the petrol pump and the supermarket. The RBA should not lift rates when this latest inflation pressure is a supply side mess caused by a pointless war that rate rises can’t stop.”

Chalmers said the economic shock would not stop reform priorities for his fifth federal budget, expected to include a reduction to the capital gains tax discount. He said the Treasury was “working up a number of tax reform options” for cabinet to consider.

Chalmers said Australia had more than enough fuel supply, despite growing interruptions because of the Iranian regime’s moves to block the strait of Hormuz.

The One Nation MP Barnaby Joyce said Australia should join countries moving to shore up international fuel supplies by sending a navy ship to the Middle East.

The US president, Donald Trump, has urged countries to send warships to defend the strategic strait after US strikes on Kharg Island, Iran’s largest export terminal for oil.

“You have to be part of a global effort,” Joyce told ABC TV. “If you are part of a beneficiary of it being resolved, you got to do something for it.”

The energy minister, Chris Bowen, on Friday cut fuel companies’ minimum stock obligations to about 700m litres of petrol and 2.2bn litres of diesel respectively, a move to free fuel for regional Australia.

Australia held about 36 days of petrol and 32 days of diesel in reserve on 3 March.