ASX 200 leaps back into the green following the latest Aussie inflation print

ASX 200 investors reacted positively to the latest Aussie CPI data. But why?

| More on:
A woman presenting company news to investors looks back at the camera and smiles.

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

At 11.30am AEDT, the S&P/ASX 200 Index (ASX: XJO) was down 0.1%.

In the minutes that followed, the benchmark Aussie index leapt 0.3% to be up 0.26% at the time of writing.

This move higher follows the Australian Bureau of Statistics (ABS) release of the latest Australian inflation data, covering the month of November.

While the ASX 200 continued to provide term deposit-busting returns of 7.5% in 2024 despite sticky inflation and high interest rates, investors and mortgage holders alike are eagerly awaiting the Reserve Bank of Australia's (RBA) first rate cut.

As you're likely aware, Australia's benchmark interest rate has been held at a 12-year high of 4.35% since the last RBA rate hike in November 2023.

And rates are unlikely to come down until inflation, particularly underlying inflation – the RBA's preferred gauge, which excludes volatile items – sustainably falls within the central bank's 2% to 3% target range.

With that in mind, here's what ASX 200 investors just learned from the ABS.

ASX 200 rises on core CPI data

The ASX 200 is back in the green after the ABS reported that the monthly Consumer Price Index (CPI) indicator rose 2.3% in the 12 months to November. That's up from the 2.1% increase reported for the 12 months to October.

Driving the ongoing inflationary pressures were a 2.9% increase in the costs of food and non-alcoholic beverages, a 6.7% increase in the price of alcohol and tobacco, and a 3.2% increase in recreation and culture costs.

Helping to tamp down inflation, electricity prices declined by 21.5% with the aid of government funding. And automotive fuel prices came down by 10.2% amid a surplus of global oil supplies.

Commenting on the latest Aussie inflation data that's helping spur an intraday rebound on the ASX 200, ABS head of prices statistics Michelle Marquardt said, "Annual CPI inflation has risen since last month, in part due to the timing of electricity rebates."

She added:

In some states and territories, households received two rebate payments in October in lieu of not receiving a payment in July. From November most households received one payment. As a result, electricity prices fell 21.5% in the 12 months to November, compared to a fall of 35.6% to October."

So, why are ASX 200 investors favouring their buy buttons after the latest inflation news?

Well, that looks to be driven by the decrease in Australia's trimmed mean inflation.

"Annual trimmed mean inflation was 3.2% in November, down from 3.5% in October," Marquardt said. "Annual trimmed mean inflation remains higher than CPI inflation as it removed large price falls for electricity and automotive fuel."

Still, that's getting enticingly close to the upper band of the RBA's inflation target, meaning the first 2025 interest rate cuts could be fast approaching.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 3 April 2025

Motley Fool contributor Bernd Struben 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 recommended BHP Group. 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

Broker looking at the share price.
Share Market News

5 things to watch on the ASX 200 on Thursday

It could be a tough session for Aussie investors today.

Read more »

A happy girl in a yellow playsuit with a zip gives the thumbs up
Share Gainers

Here are the top 10 ASX 200 shares today

It was a miserly Wednesday session for investors today.

Read more »

A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today
Broker Notes

Goldman Sachs says this ASX 200 share could rocket almost 100%!

Let's see why the broker is so bullish on this cheap stock.

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Broker Notes

These ASX 200 shares could rise 30% to 70%

Analysts think these shares could be destined to deliver big returns over the next 12 months.

Read more »

a man looks down at his phone with a look of happy surprise on his face as though he is thrilled with good news.
Broker Notes

3 more of the very best ASX shares to buy now

Bell Potter rates these blue chips very highly. Here's why.

Read more »

A man looking at his laptop and thinking.
Share Market News

5 things to watch on the ASX 200 on Wednesday

It looks set to be a big day for Aussie investors today. Here's what to expect.

Read more »

Man presses green buy button and red sell button on a graph.
Broker Notes

5 top ASX 200 stocks that brokers rate as buys after the market selloff

These stocks could be top buys for investors looking to add to their portfolio.

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why Bellevue Gold, Collins Foods, Hub24, and Zip shares dropped today

These shares were out of form on Tuesday. But why?

Read more »