China's economic growth cooled further in July, weighed down by the government's tightening policies, while inflation rose to its highest level in 21 months.

But these readings cannot be translated into signs of stagflation, according to most economists, who see little risk of a hard landing and do not expect higher inflation.

The industrial growth fell further to 13.4 percent year-on-year in July compared to 13.7 percent in June, the National Bureau of Statistics (NBS) announced Wednesday.

Urban fixed-asset investment from January to July grew at a slower pace, compared to the first half of the year. Retail sales growth also moderated in July from June, according to the NBS.

Economic indicators showed continuing moderation, as the central government's crackdown on local government investment vehicles and control over the property market affected industrial and investment growth, Li Jing, chairwoman of China Equities and Commodities of J.P. Morgan Chase, told a media briefing in Beijing Wednesday.

"Policies won't further tighten in the second half. And there will be slight adjustments while ensuring policy stability," Zhang Liqun, a researcher at the macroeconomic research department of the Development Research Center of the State Council, told the Global Times.

Economic growth is expected to moderate in the second half, while picking up the pace next year, Zhang said.

Li was also confident about the economy's fundamentals. "We don't have concerns about the whole macroeconomic growth, whereas the noteworthy point is a shift towards consumption-driven model from one that is highly investment and exports-driven."

The consumer price index (CPI) reached a high of 3.3 percent in July, did not raise fears of rising inflation and potential rate hikes.

July's CPI was mainly driven by a rise in food prices. Factors including floods in South China led to food price hikes, but the seasonal trend won't last long, Li said.

The producer price index (PPI) went down to 4.8 percent in July from 6.4 percent in June, also easing worries over looming inflation.

There is little possibility for the central bank to hike rates this year, Li said. The weak global economic recovery dampens the need for such harsh measures, she said.