The S&P/ASX 200 Index (ASX: XJO) was down 0.7% at 11:30am AEST today.
That's when the Australian Bureau of Statistics (ABS) released the latest batch of inflation data for the 12 months to August.
In the minutes that followed the ABS release, investors favoured their sell buttons, sending the ASX 200 down 1.1% in intraday trade.
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Why is the ASX 200 slipping on the latest inflation print?
A lot of ASX 200 stocks came under pressure after the ABS reported that the monthly Consumer Price Index (CPI) indicator rose 3.0% in the 12 months to August.
That's significantly ahead of consensus expectations of a 2.8% increase, which would have been in line with the July readings.
The uptick in inflation looks to be dimming ASX 200 investor hopes for ongoing interest rate cuts from the Reserve Bank of Australia. As you likely know, the RBA delivered its second rate cut of the year on 12 August. This sees the official Aussie cash rate at 3.60%.
The RBA meets again on Tuesday, 30 September, to make its next rate decision. And the odds of a cut have just gone from somewhat unlikely to very unlikely. The RBA's following interest rate decision will be announced on 4 November.
What did the ABS report?
ASX 200 investors clearly got a case of the jitters with Michelle Marquardt, ABS head of prices statistics, noting "The 3.0% annual CPI inflation to August was up from 2.8% to July, making this the highest annual inflation rate since July 2024."
Uh-oh.
The ABS said that the largest contributors to annual inflation were housing (up 4.5%), food and non-alcoholic beverages (up 3.0%), and alcohol and tobacco (up 6.0%).
On a positive note, Australia's annual trimmed mean inflation edged lower.
"Annual trimmed mean inflation was 2.6% to August 2025. This is down from 2.7% to July 2025," Marquardt said, which is likely helping keep the lid on the ASX 200 sell-off this afternoon.
However, CPI excluding volatile items and holiday travel still increased to 3.4% in the 12 months to August, compared to a 3.2% rise in the 12 months to July.
Electricity an inflation shocker
Inflation, and the outlook for interest rate relief for ASX 200 investors and mortgage holders, didn't get any help from surging electricity bills.
The ABS reported that electricity costs rose 24.6% in the 12 months to August, with much of that driven by the end of government power rebates.
According to Marquardt:
The annual rise in electricity costs is primarily related to households in Queensland, Western Australia and Tasmania having higher out-of-pocket costs in August 2025 than they did in August 2024…
Excluding the impact of the various changes in Commonwealth and State electricity rebates over the last year electricity prices rose 5.9%.
With today's intraday slide factored in, the ASX 200 remains up 7.5% since this time last year.
