Australia's Reserve Bank has opted to hold interest rates for another month, which will extend more relief to the economy now treading a soft patch to full recovery.

The official cash rate in Australia is still at 4.75 percent, in spite a series of inflation index rises and even breaching the band of 2-3 percent set by the RBA.

Australia Bureau of Statistics data showed that the consumer price index (CPI) rose 0.9 percent in the June quarter, with the annual rate jumping to 3.6 percent, its highest level since 2008 and up from 3.3 percent in the March quarter, sparking speculation of a rate rise.

"The board considered whether the recent information warranted further policy tightening," RBA Governor Glenn Stevens said in the statement. "On balance, the board judged that it was prudent to maintain the current setting of monetary policy, particularly in view of the acute sense of uncertainty in global financial markets."

Analysts have assessed that this move of the RBA will bode well for the Australia economy and extend more relief to consumers, who need to endure higher consumer prices and a relatively high value of the Aussie dollar.

Industries have sought for further relief and consumers have veered away from spending causing the local retail to slump further.

According to Annette Beacher, head of Asia Pacific Research at TD Securities in Singapore, "the declining credit growth and tempered consumer spending have overshadowed the private sector investment boom."

She noted that this clearly points to the two-speed economy taken b y Australia.

Factory Slump

A gauge of Australian manufacturing released on Monday dropped to a two-year low in July. Business and consumer confidence have dropped while inflation accelerated last quarter to the fastest annual pace in three years, fuelled by a mining boom that has helped drive the currency to a record.

Today's inflation report showed the price of fruit and vegetables rose 1.8 percent in July and utilities costs advanced 4 percent. These were offset by falls in auto, visual and computing, clothing and footwear, and rents, it showed.