The S&P/ASX 200 Index (ASX: XJO) first edged higher, then slid slower as investors mull the outlook for inflation Down Under.
The ASX 200 was down 0.2% at 11:30am AEST. That's when the Australian Bureau of Statistics (ABS) released the latest Consumer Price Index (CPI) data.
In the 30 minutes of trading that followed, investors alternately sent the benchmark index up and down. At the time of writing, the ASX 200 is again down 0.2% in intraday trade on Wednesday.
Here's why the monthly inflation figure for November is spurring uncertainty.
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ASX 200 investors hesitant on CPI data
The ASX 200 is seeking direction after the ABS reported that the monthly CPI indicator increased 4.3% in the 12 months to November 2023.
That's down from the 4.9% annual rise recorded in October and the 5.6% reported in September.
As Michelle Marquardt, ABS head of prices statistics, noted, it's also "the smallest annual increase since January 2022". And it's well down from the blistering 8.4% inflation peak reported in December 2022.
Still, 4.3% remains above the Reserve Bank of Australia's target range of 2% to 3%. And today's CPI figures could be sowing doubts amongst ASX 200 investors on the RBA's next interest rate move when the central bank board meets again on 6 February.
While a February rate cut now appears highly unlikely, a potential rise is not off the table.
The biggest contributors to the ongoing price rises in Australia were housing, up 6.6%, food and non-alcoholic beverages, up 4.6%; insurance and financial services, up 8.8%; and alcohol and tobacco, up 6.4%.
And Aussie renters are really feeling the pressure.
According to Marquardt:
The increase in Commonwealth Rent Assistance has reduced out-of-pocket rent costs for eligible tenants since its introduction on 20 September 2023. Excluding these changes to rent assistance, rents would have increased 8.8% over the year to November 2023.
While underlying inflation also came down, it remains above headline inflation at 4.8%.
"CPI inflation is often impacted by items with volatile price changes like automotive fuel, fruit and vegetables, and holiday travel," Marquardt said.
Stripping those items out from the headline CPI she said, "When excluding these volatile items from the monthly CPI indicator, the annual rise in November was 4.8%, lower than the annual rise of 5.1% in October."
Clearly inflation is heading back in the right direction. But the ASX 200 could be struggling to gain on the news as it's unlikely to spur the RBA towards any early New Year's rate cuts.
