At midday AEDT on Wednesday, the benchmark S&P/ASX200 index was down 30 points, or 0.36 per cent, to 8,219.2, while the broader All Ordinaries had fallen 24.3 points, or 0.29 per cent, to 8,481.6.
Investors were unimpressed by the one percentage point drop in the annual consumer price index to 2.8 per cent in the September quarter.
That puts headline inflation back within the Reserve Bank of Australia's target range of two to three per cent.
But the drop was already widely expected by analysts and the all-important trimmed mean, which the central bank uses to gauge underlying inflation, was still at 3.5 per cent.
Energy rebates and lower petrol prices weighed on the headline figure but price pressures remained in recreation, food and insurance.
ANZ economists Brian Martin and Daniel Hynes accurately predicted the trimmed mean to come in at 3.5 per cent.
"We do not think the forecast decline in trimmed mean inflation will be enough to convince the RBA it should begin the easing cycle this year, and we continue to expect it to stay on hold at 4.35 per cent until a 25bp (basis point) cut in February 2025," they said in a research report on Wednesday morning.
Overnight, shares rose on Wall Street led by Google parent Alphabet, which climbed higher after beating earnings estimates for the September quarter.
Miners, property trusts and IT shares had risen at midday, while the remaining eight ASX sectors were in the red.
Australia's largest miner, BHP, gained 1.5 per cent after the price of iron ore climbed.
The company had moved on from its pursuit of London-listed miner Anglo-American after its takeover bid earlier this year was rebuffed, chair Ken McKenzie told shareholders.
Fellow iron ore miner Rio Tinto rose 0.8 per cent while Fortescue was 1.2 per cent higher.
The big four banks were all lower, with CBA down one per cent, NAB 0.9 per cent, ANZ 0.8 per cent and Westpac 0.5 per cent.
Supermarket giant Woolworths tumbled 5.8 per cent after warning profit for financial year 2025 was likely to come in lower than previously expected.
Rival Coles fell three per cent, as investors recalibrated expectations for retail trading.
Troubled casino operator Star Entertainment plunged 11.3 per cent after reporting a loss of $1.6 billion for the last financial year.
"The Star's 2024 financial year performance was impacted by challenging trading conditions, cost of living pressures, casino operating reforms and loss of market share," the company said in a statement.
Star was fined $15 million earlier in October and had its Sydney licence suspension extended after a probe by the NSW Independent Casino Commission revealed further significant failings in its operations.
The Australian dollar was buying 65.66 US cents, up from 65.56 US cents at Tuesday's ASX close.
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