ASX 200 heads downhill following latest inflation data

The S&P/ASX 200 Index (ASX: XJO) has lost ground following a strong start to the day.

In earlier trade, the ASX 200 was up 0.8%. That saw the benchmark index at its highest level in six weeks.

But the bullish run got hit with some headwinds in late morning trade following the release of the latest inflation data from the Australian Bureau of Statistics (ABS). That saw the ASX 200 slip to a 0.1% gain before currently regaining some ground to be up 0.3% during the lunch hour.

What’s the latest on Aussie inflation?

Investors hoping inflation was slowing were disappointed by the ABS report, revealing the Consumer Price Index (CPI) rose 1.8% in the September quarter. That brings the annual inflation level to 7.3%, significantly higher than consensus expectations.

Commenting on the data, Michelle Marquardt, program manager of prices at the ABS, said:

This quarter’s increase matches that of last quarter and is lower than the 2.1% result in March quarter this year. All three results exceed any other quarterly results since the introduction of the Goods and Services Tax (GST) and underlie the highest annual increase in the CPI since 1990.

Annual trimmed mean inflation leapt to 6.1% from 4.9% in the June quarter, the highest level since the series commenced in 2003. That could well trigger another big rate hike from the RBA and pressure the ASX 200.

According to Capital Economics senior Australian analyst Marcel Thiellant (quoted by The Australian Financial Review):

The 6.1% annual rise in trimmed mean CPI was a touch above the RBA’s year-end forecast of 6%. The stronger-than-expected rise in consumer prices in Q3 is consistent with our forecast that the Reserve Bank of Australia will hike rates more aggressively than most anticipate.

Also pressuring the ASX 200

Putting further pressure on the ASX 200 today is a sharp downturn in US futures.

Futures on the NASDAQ are down 2% while the S&P 500 is down 0.9%.

This comes following some disappointing results from US tech giants Alphabet Inc (NASDAQ: GOOGL) – or Google, if you prefer – and Microsoft Corporation (NASDAQ: MSFT).

Alphabet’s third-quarter revenue fell short of consensus expectations, which sent its shares down 6.7% in after-hours trading.

Microsoft, meanwhile, is down 6.6% in after-hours trade, on lower than hoped for revenue projections.

While the ASX 200 has lost ground today, the index remains in the green despite these headwinds.

The post ASX 200 heads downhill following latest inflation data appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. 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 positions in and has recommended Alphabet (A shares), Alphabet (C shares), and Microsoft. The Motley Fool Australia has recommended Alphabet (A shares) and Alphabet (C shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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