BEIJING  - Consumer inflation in China rose to 1.6 percent in July, the government said Sunday, as downward pressure on prices eased further in the world's second-largest economy.

The reading for the consumer price index (CPI), a main gauge of inflation released by the National Bureau of Statistics (NBS), was higher than June's 1.4 percent.

Moderate inflation can be a boon to consumption as it pushes consumers to buy before prices go up, while falling prices encourage shoppers to delay purchases and companies to put off investment, both of which can hurt economic growth.

Slowing economic growth and declines in commodity prices have helped keep China's consumer inflation in check, with some analysts raising the prospect of looming deflation given weakness in other price yardsticks.

The producer price index -- a measure of costs for goods at the factory gate and a leading indicator of the trend for CPI -- declined 5.4 percent in July, the NBS said, compared with a 4.8 percent retreat in June, and marking the 41st consecutive monthly fall.

The CPI figure compared with the median estimate of 1.5 percent in a survey of economists by Bloomberg News.

In July, food prices, normally the key driver for Chinese inflation, rose 0.7 percent year-on-year, the NBS said.

The survey collects prices from more than 63,000 outlets including grocery stores, supermarkets, shopping malls and agricultural trade markets across 500 cities and counties in the country, the NBS says. CPI touched 0.8 percent in January -- its lowest in more than five years -- but rebounded to 1.5 percent in April.

China's economic growth hit a 24-year low last year, expanding 7.4 percent amid a steady slowdown from years of double-digit expansions.

Growth in gross domestic product (GDP) has slowed further this year, expanding 7.0 percent in each of the first two quarters.

While authorities say that weaker growth is welcome as it fits in with their plan to shift the country's economic model away from investment and towards consumer spending, they are on guard that expansion does not decelerate too sharply.

The central People's Bank of China (PBoC) has cut benchmark interest rates four times since November and has also loosened requirements for how much cash banks must keep on their books in a bid to boost lending and stimulate growth.

The PBoC has also seen the measures as tools to fight deflation risks.