ASX 200 trims losses on latest inflation news

Australian inflation has come off a 30 year high.

| More on:
Woman looking at a phone with stock market bars in the background.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The ASX 200 regained some ground to trade 0.06% lower at 7,317.8 points amid the release of the latest Aussie inflation data
  • Australia's CPI lifted 1.4% in the March quarter and 7% over the 12 months to March – down from a 30-year high recorded in the previous read
  • Experts are at odds over whether the RBA will hike interest rates at Tuesday's meeting

The S&P/ASX 200 Index (ASX: XJO) salvaged some of its losses on news Australian inflation eased last quarter.

The index rebounded this afternoon to trade at 7,317.8 points at the time of writing, just 0.06% lower than it finished Monday's session. That's up from its intraday low of 7,285.3, which had marked a 0.5% fall.

Its recovery came as the Australian Bureau of Statistics (ABS) revealed the consumer price index (CPI) rose 7% over the 12 months to the March quarter. That marks a notable drop on the 30-year high of 7.8% reached in the December quarter.

What did the ABS report?

Australia's CPI rose 1.4% in the March quarter, or 7% over the 12 months prior. That was the lowest quarterly rise since December 2021. Meanwhile, core inflation was 6.6%, down from 6.9% last quarter.

ABS head of prices statistics Michelle Marquardt commented on the latest CPI data, saying:

While prices continued to rise for most goods and services, many of these increases were smaller than they have been in recent quarters.

Annual inflation for goods of 7.6% was down from the 9.5% recorded in December, due to price falls for goods such as furniture, household appliances and clothing in the March quarter, as well as automotive fuel prices easing in recent quarters. However, annual inflation for services was 6.1%, up from 5.5% in the December quarter and is the highest since 2001.

What does easing inflation mean for the ASX 200?

As mentioned up top, the market has responded positively to the latest inflation figures.

That's likely due to the impact they might have on the Reserve Bank of Australia's (RBA's) next interest rate decision, to be made on Tuesday.

The RBA put forward ten consecutive rate hikes between May 2022 and March 2023 in an effort to combat rising inflation by tightening consumer spending. It paused its streak in April, to the relief of investors and borrowers alike. The cash rate currently sits at 3.6%.

While the inflation rate remains well above the RBA's target of 2% to 3%, the drop still brings hope the rate hiking cycle may have broken.

Betashares chief economist David Bassanese tweeted shortly after the latest CPI data dropped, saying:

[T]hat's good enough! No RBA rate hike next week, and still see no further hikes this year.

CreditorWatch chief economist Anneke Thompson, however, disagrees. She says inflation is "still showing cause for concern" and will likely result in another hike at Tuesday's RBA board meeting.

Speaking in Canberra, Treasurer Jim Chalmers commented that today's release shows "inflation has passed its peak and is now moderating," according to The Australian.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Young girl drinking milk showing off muscles.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a great end to the trading week for ASX investors today.

Read more »

Hands reaching high for a trophy with a sunset in the background.
Record Highs

The ASX 200 Index is on its way to another all-time high today. Here's why

These blue chip stocks are driving the index towards a new record today...

Read more »

Group of friends trading stocks on their phones. symbolising the 3 most traded ASX 200 shares today
Share Market News

3 ASX mining stocks topping the most-traded list in October

Chinese stimulus news and company announcements likely contributed to the higher trading activity.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Share Gainers

3 ASX 200 stocks smashing the benchmark this week

These three ASX 200 stocks are leading the charge this week. Here’s how.

Read more »

Two people tired and resting after sports race.
Broker Notes

Fundie rates 2 ASX 200 stocks in short-term pain but with long-term gain potential

Blackwattle Investment Partners sees these 2 ASX 200 stocks as worthy of a buy and hold strategy.

Read more »

A young woman holding her phone smiles broadly and looks excited, after receiving good news.
Share Gainers

Why A2 Milk, EOS, GQG, and Mineral Resources shares are racing higher today

These shares are ending the week strongly. But why?

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Megaport, Pilbara Minerals, Vysarn, and WiseTech shares are falling today

These shares are ending the week in the red. But why?

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »