ASX Slips as Inflation Beats Forecasts, Markets Gauge Rate Outlook

April 30, 2025 12:43 PM AEST | By Team Kalkine Media

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ASX Slips as Inflation Beats Forecasts, Markets Gauge Rate Outlook — Image source: shutterstock

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Highlights

ASX dips as inflation edges past expectations

CPI climbs 0.9% in March quarter, above 0.8% forecast

Rate-sensitive sectors show cautious moves

The Australian sharemarket eased lower on Wednesday as investors reacted to fresh inflation data that signalled price pressures remain slightly more persistent than expected. The benchmark S&P/ASX 200 Index, which was earlier up by 0.4%, trimmed gains and was up only 0.2% by 11:45am after the release of the March quarter Consumer Price Index (CPI) by the Australian Bureau of Statistics.

Headline CPI rose by 0.9% for the March quarter, surpassing the market consensus forecast of 0.8%. On an annual basis, inflation held steady at 2.4%, maintaining its position within the Reserve Bank of Australia's (RBA) target range, but at the higher end. The data triggered market caution over the future trajectory of interest rates, especially with signs that disinflation may not be progressing as quickly as anticipated.

Investors responded with a moderate pullback, particularly across rate-sensitive and consumer-facing sectors. Financials and real estate sectors, which typically react to expectations of interest rate changes, saw mixed performance. Major banks, including Commonwealth Bank of Australia (ASX:CBA) and Westpac Banking Corporation (ASX:WBC), traded in narrow ranges.

Technology shares, which had earlier gained momentum, also softened after the CPI release. Accounting software firm Xero Ltd (ASX:XRO) pared some of its early session gains, reflecting broader market unease around interest rate-sensitive growth stocks.

Meanwhile, consumer discretionary names showed signs of restraint amid the prospect of household budgets facing ongoing pressure. Retailer Wesfarmers Ltd (ASX:WES), which owns brands such as Bunnings and Kmart, hovered near the flatline, while electronics retailer JB Hi-Fi Ltd (ASX:JBH) also showed limited movement.

Resource stocks, typically driven more by global commodity trends, provided some support to the index. BHP Group Ltd (ASX:BHP) and Rio Tinto Ltd (ASX:RIO) managed to hold their ground as iron ore prices steadied amid ongoing supply concerns.

Market participants will be watching closely for any signals from the RBA or economic policymakers in the coming days, especially as inflation data adds complexity to the monetary policy outlook. While the CPI figure alone may not be enough to trigger an immediate policy change, it could influence the tone of upcoming commentary from the central bank.

As the session progresses, investor attention is likely to remain focused on sector rotation and broader economic indicators to assess the resilience of the domestic economy in a potentially higher-for-longer rate environment.

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