The S&P/ASX 200 Index (ASX: XJO) was up a healthy 0.4% in morning trade.

Then, at 11:30am AEDT, the benchmark Aussie index rapidly gave back those gains, falling 0.5% over a period of minutes to dip into the red. It's since recovered some of those losses.

As you're likely aware, 11:30 was when the Australian Bureau of Statistics (ABS) released the latest Australian inflation data, covering the month of March.

Here's what's happening with Australia's ongoing struggle to tamp down inflation.

Tuned in ASX 200 investors will have known to expect an uptick in inflation in March.

Consensus estimates forecast a 0.8% increase in the consumer price index (CPI) in the March quarter, up from 0.6% in the December quarter. This would have seen annual inflation come in at 3.4%.

But, as we've been seeing in the United States, inflation in Australia surprised to the upside.

According to the ABS, CPI rose 1.0% in the March 2024 quarter and 3.6% annually.

That remains well above the RBA's 2% to 3% target range.

And today's data looks to be pressuring the ASX 200 as investors re-think the timing and pace of any upcoming interest rate cuts from the central bank. The official cash rate stands at 4.35%, up from the rock bottom 0.10% in early May 2022, following 13 rate hikes.

Yet, while inflation is proving stubborn, progress is being made.

"While prices continued to rise for most goods and services, annual CPI inflation was down from 4.1% last quarter and has fallen from the peak of 7.8% in December 2022," Michelle Marquardt, ABS head of prices statistics, said.

The biggest factors spurring inflation down under over the three months were education (up 5.9%), health (up 2.8%), housing (up 0.7%), and food and non-alcoholic beverages (up 0.9%). 

Commenting on the ongoing inflation in housing, Marquardt said, "Rental prices rose 2.1% for the quarter in line with low vacancy rates across the capital cities. Rents continue to increase at their fastest rate in 15 years."

However, ASX 200 investors can take some solace in the ongoing reduction in underlying inflation, which takes out highly volatile items. This measure fell to 4.0% for the March quarter, down from 4.2% last quarter.

"This is the fifth quarter in a row of lower annual trimmed mean inflation, down from the peak of 6.8% in the December 2022 quarter," Marquardt noted.