April 24 (Reuters) - Australian shares cut early gains on Wednesday after a softer-than-expected slowdown in inflation in the first quarter reinforced bets of a higher-for-longer interest rate environment.

The S&P/ASX 200 index was up 0.1% at 7,869.6, as of 0135 GMT, after rising 0.5% earlier in the day on the back of gains in heavyweight financials and energy stocks.

Australian consumer price inflation slowed less than expected in the three months ended March, while the progress in core inflation stumbled, reinforcing market bets that an interest rate cut could be a long way out.

Data from the Australian Bureau of Statistics showed the consumer price index rose 1% in the first quarter, above market forecasts of 0.8%.

Rate-sensitive financials were trading 0.7% higher after rising nearly 1% earlier in the day. The "Big Four" banks were all trading in positive territory.

Energy stocks were up 0.2% after gaining as much as 0.8% earlier in the day. Shares of Woodside Energy and Santos climbed 0.2% and 0.3%, respectively.

Gold stocks were up 0.1%, giving up most of their near 2% early gain. Bullion prices edged lower as fears of an escalation in the Middle East conflict eased, while investors waited for crucial U.S. economic data that could shed more light on the timing of interest rate cuts.

Miners fell 1% as iron ore prices slipped on signs of softening in the steel market due to subdued demand in top consumer China.

Shares of BHP Group fell 1.3%, while those of Fortescue slipped 1.6% after the world's fourth-largest iron ore miner reported a 6% dip in quarterly iron ore shipments.

In New Zealand, the benchmark S&P/NZX 50 index rose 0.5% to 11,859.76. (Reporting by Rajasik Mukherjee and Rishav Chatterjee; Editing by Sherry Jacob-Phillips and Subhranshu Sahu)