The 16-year-old called triple zero threatening "acts of violence" around 10pm on Saturday about the same time he was spotted outside the store in the southern Perth suburb of Willetton.
Responding officers deployed Tasers when the boy rushed at them but he continued to advance at police before a single gunshot brought him to the ground.
While police had stopped short of labelling the stabbing as a terrorist incident, Mr Albanese said it was time to support the actions of law enforcement bodies.
"It's the right time to back our police, it's the right time to back the processes that they undertake," he told reporters in Canberra.
"My first thoughts are with the victim, of course in this incident, but also to applaud the very swift action of WA police in acting here.
"(I) acknowledge the very important work that the Muslim community did to alert police to the messages that had been sent out by this young man."
The boy had been part of a de-radicalisation support program treating extremism since 2022.
Asked whether the program had failed, WA Police Minister Paul Papalia said working with radicalised people was challenging.
"It is a tough gig to try and change people's beliefs once they've become obsessed and radicalised in this way," he told Seven's Sunrise program on Monday.
"These are people who haven't necessarily committed a crime and you can't lock people up for holding a belief ... That's part of democracy.
"The de-radicalisation effort was being thrown at him - every effort was being made - unfortunately, in this case, it didn't prevent him from doing what he did."
Imam Syed Wadood Janud says Perth's Muslim community is bracing for a backlash. (Supplied/AAP PHOTOS)
Mr Albanese said the incident highlighted concerns about the content young people can access online.
"One of the themes of a range issues lately involves ... social media, where people can be pushed through the use of algorithms of what occurs towards more extreme positions - is of course a concern," he said.
The Imam of Perth's largest mosque condemned the attack "in the strongest terms".
"There is no place for violence in Islam," Nasir Mosque Iman Syed Wadood Janud said.
"This was so close to home - any one of us could have been at Bunnings," he said.
About 10.15pm last night, Saturday May 4 2024, police responding to a 000 call encountered a male— WA Police Force (@WA_Police) armed with a knife in a carpark on High Road in Willetton. pic.twitter.com/hkYdIBW95EMay 5, 2024
Imam Wadood Janud also said the local Muslim community was worried about a possible backlash.
"We're extremely concerned about Islamophobia," he said.
"Sometimes the backlash can be very harsh."
The teen, who was known to police and had mental health and online radicalisation issues, was taken to hospital and declared dead about 11pm on Saturday.
The injured man in his 30s was taken to Royal Perth Hospital, where he remains in a serious but stable condition.
WA Police Commissioner Col Blanch said the teen had acted alone and the attack appeared to be random because he had no connection to the victim.
Members of the Muslim community became concerned about the teen after he posted messages online and contacted police before the incident.
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