The S&P/ASX 200 Index (ASX: XJO) was up 0.3% at 11:30am AEST. In the minutes that followed, investors favoured their sell buttons to pare those gains. At the time of writing, the benchmark Aussie index is up 0.16%.
This came on the heels of the latest batch of quarterly inflation data, released by the Australian Bureau of Statistics (ABS) at 11:30am.
ASX 200 investors have been keeping a close eye on inflation, with the Reserve Bank of Australia set to make its next interest rate decision on 20 May.
The RBA opted to leave interest rates on hold at 4.10% at its last meeting on 2 April, after making its first 0.25% cut in more than five years on 19 February. The RBA's target range is for inflation to remain between 2% and 3%.
Here's what we just learned about the path of inflation Down Under.
ASX 200 dips as inflation tops expectations
The ASX 200 slipped lower after the ABS reported that the Consumer Price Index (CPI) rose 0.9% in the March 2025 quarter and 2.4% annually.
This sees the pace of inflation exceeding consensus forecasts of a 0.8% quarterly increase.
"The March quarter increase of 0.9% follows two quarters in a row of 0.2% rises," said Leigh Merrington, ABS acting head of prices statistics.
Annual inflation of 2.4% was unchanged from the December 2024 quarter.
As for the trimmed mean (or core) inflation, the RBA's preferred gauge which cuts out certain volatile items, Merrington said, "Trimmed mean annual inflation was 2.9% in the March quarter, down from 3.3% in the December quarter."
Merrington noted that, "This is the lowest annual trimmed mean inflation rate since the December 2021 quarter."
Importantly for ASX 200 investors hoping for an RBA rate cut, it also now falls within the central bank's 2% to 3% target range.
The ABS reported that the main contributors to the quarterly inflation rise were housing (up 1.7%), education (up 5.2%), and food & non-alcoholic beverages (up 1.2%).
Is interest rate relief likely?
Commenting on a potential May RBA interest cut that could boost the ASX 200, eToro market analyst Josh Gilbert said:
Australian quarterly CPI data came in a little hotter than expected today at 2.4%. However, Aussies can still breathe easy as they'll still get a rate cut next month, given current global trade tensions.
Trimmed CPI year-over-year rose 2.9%, falling inside the RBA's target band for the first time in three years. Ultimately, this is good news, but we still won't see Michele Bullock declaring the inflation fight is over anytime soon…
The upside is that with growth outlooks softening, trade tensions still high, and inflation still moving in the right direction, the expectation of four cuts this year is likely to stay.
Invest accordingly.
