Australian shares closed lower on Thursday, dragged down by banks and real estate stocks as higher-than-expected inflation data sparked fears of a possible rate hike by the Reserve Bank of Australia.

The S&P/ASX 200 index fell 0.3% lower to 7,759.6 at the close of trade. The benchmark had ended down 0.7% on Wednesday.

Wednesday's Consumer Price Index (CPI) data came in higher than expected, indicating inflation rose faster than anticipated and instilling fears of an imminent rate cut from the RBA.

Analysts at UBS expect the central bank to raise interest rates at its August meeting.

"RBA should have raised to 5% in the previous cycle and now they are facing the policy mistake. Inflation is rising and the bottom half of the population is in recession," said Mathan Somasundaram, CEO of Deep Data Analytics.

Globally, traders await Friday's U.S. Personal Consumption Expenditures (PCE) price data, the Federal Reserve's preferred measure of inflation, for a clearer picture of the world's most influential central bank's monetary easing stance.

Back on the bourse, the rate-sensitive financials took the brunt of investors seeking ways to minimise their losses as they lost 0.5%. The "Big Four" banks lost between 1% and 1.4%.

"Global investors are selling banks and rotating into miners to keep the exposure. They are jumping into miners to keep the market supported for the quarter end," he added.

Bellwether miners pared back some of their losses from early trade and were flat, with Rio Tinto rising 0.4%.

Real estate stocks, also rate-sensitive, fell 2.2%, hitting their lowest levels since May 3.

Industrials followed suit with a 0.7% drop while tech stocks rebounded from their earlier losses in the day to close 0.7% higher, rising in tandem with its U.S. peers.

New Zealand's benchmark S&P/NZX 50 index snapped a two-day gaining streak to end 1% lower to 11,717.4300. (Reporting by Rajasik Mukherjee in Bengaluru; Editing by Janane Venkatraman )