China's consumer price index (CPI) rose 1.8 per cent in July compared to the same month a year ago, the National Bureau of Statistics said yesterday.

　　The index, the main way policy-makers measure inflation, went up slightly from the 1.6 per cent growth recorded in June.

　　The CPI rose 2.2 per cent in the first seven months of the year, the bureau said in a statement.

　　Grain prices, which declined 0.9 per cent year-on-year in July, dampened prices, as did continued falls in prices of durable goods and communications costs.

　　But vegetable prices shot up as much as 15.5 per cent, while the cost of health and other services also continued to rise.

　　Qi Jingmei, a senior economist with the State Information Centre, said last month's CPI was in line with the country's current economic development.

　　The government wanted to see higher economic growth but just moderate growth in consumer prices, she said.

　　This situation would continue for the rest of the year, she added.

　　While grain prices might drop following the expected good autumn harvest, there were strong price pressures for public products such as water and electricity, she said.

　　"The government may take the opportunity of a relatively low CPI to raise prices for public utilities such as water and electricity," she said.

　　High prices of energy and raw materials may be passed to the end product, as companies can only bear so much price pressure, she said.

　　However, she said the government would continue to put price controls on public products, as it did not want to see the CPI rising by more than 4 per cent this year.

　　"The CPI is likely to grow 2 to 2.5 per cent this year," Qi said.

　　Wang Zhao, a researcher with the State Council Development Research Centre, agreed the CPI would continue to stay at a moderate level, due to the country's stable economic development and higher oil prices.

　　He added that last month's 2 per cent revaluation of the renminbi had had little impact on prices, although it would dampen exports and lead to the import of more cheap foreign-made products.

　　Zhuang Jian, a senior economist with the Asian Development Bank, said China's CPI would not have big ups and downs this year.

　　"While the government continues to control prices for energy, raw materials and public products, price pressures from food and industrial products are not very big," he said.

　　This year's consumer price index will rise moderately to 2.5 per cent, he said.

　　But Yuan Gangming, a senior economist with the Chinese Academy of Social Sciences, expressed concern that the CPI could decline further to as low as less than zero in a single month this year.

　　There were almost no factors except higher oil prices which would push up consumer prices, he said.

　　The decline in grain prices and the slow rise in the price of production will drag down the CPI, he said.

　　The government's tightening measures will also have a downward impact on the index, he said.

　　He added that the Chinese economy is suffering from weak overall demand.