The S&P/ASX200 finished up 20.1 points, or 0.29 per cent, to 7,035.3, while the All Ordinaries gained 22.7 points, or 0.31 per cent, to 7,245.8.
The benchmark index faded in the afternoon after surging just before lunchtime on the back of the inflation report.
The Australian consumer prices rose 4.9 per cent in the 12 months to October, down from 5.6 per cent in September and a bit under expectations of 5.2 per cent rise.
Betashares chief economist David Bassanese said the CPI report, along with Tuesday's retail sales data showing consumer spending slowed last month, effectively ruled out the risk of a pre-Christmas rate hike from the Reserve Bank.
But Mr Bassanese said there was still a chance the Reserve Bank would raise rates in February, if the December quarter CPI report released in late January showed persistent service sector inflation.
The Australian dollar climbed further following the CPI report, at one point hitting a fresh four-month high of 66.77 US cents.
Saxo Asia Pacific market strategist Charu Chanana said while the CPI print was below expectations, it wasn't enough of a dovish surprise to tank the Aussie.
Traders were still pricing in some chance of another rate hike, Ms Chanana said, which suggests its gains could continue.
Six of the ASX's 11 sectors finished in the green on Wednesday, with tech the biggest gainer, climbing 2.1 per cent as Xero added 2.9 per cent.
The Big Four banks were mostly lower, with NAB dropping 0.9 per cent to $28.10, ANZ falling 0.7 per cent to $24.18 and Westpac retreating 0.5 per cent to $21.15. CBA was the outlier, basically flat at $103.33.
In the heavyweight mining sector, goldminers were ascendant for a second day as the price of the precious metal hovered just below $US2,044 an ounce, its best level in six months.
Newmont and Evolution both rose 5.4 per cent, while Evolution lifted 4.4 per cent and Perseus climbed 6.7 per cent.
The iron ore giants had less success, with BHP closing down 0.5 per cent at $46.19, while Fortescue fell 0.4 per cent to $24.78 and Rio Tinto dipped 0.2 per cent to $124.58.
Elsewhere, Harvey Norman rose 4.2 per cent to a week and a half high of $3.76 as the retailer said sales from July 1 through last week were down 7.8 per cent, compared to the same period a year ago. Australian same-store sales are down 11.9 per cent, Harvey Norman said.
The company also received a "first strike" at its annual general meeting as a massive 81.8 per cent of shareholders voted against its renumeration report.
Temple & Webster soared 14.4 per cent to $7.39 as chief executive Mark Coulter told the furniture e-retailer's annual general meeting the Black Friday/Cyber Monday four-day trading period delivered $17.4 million in sales, double that of last year.
"We continue to grow our market share at a time when the overall furniture and homewares market is down, reflecting the resilience of our business model and flexiblity of our merchandising strategy," Mr Coulter said.
The Australian dollar was buying 66.39 US cents, from 66.21 US cents at Tuesday's ASX close.
ON THE ASX:
* The benchmark S&P/ASX200 index on Wednesday finished 20.1 points higher at 7,035.3, a gain of 0.29 per cent.
* The broader All Ordinaries closed up 22.7 points, or 0.31 per cent, at 7,245.8
CURRENCY SNAPSHOT:
One Australian dollar buys:
* 66.39 US cents, from 66.21 US cents at Tuesday's ASX close
* 97.73 Japanese yen, from 98.12 Japanese yen
* 60.36 Euro cents, from 60.46 Euro cents
* 52.22 British pence, from 52.42 pence
* 107.34 NZ cents, from 108.47 NZ cents.
