China's consumer prices increased 1.8 percent in July year on year, the slowest pace since February 2010. [File Photo]

China's consumer prices increased 1.8 percent in July year on year, the slowest pace since February 2010, the National Bureau of Statistics (NBS) announced Thursday.

The Consumer Price Index (CPI), the main gauge of inflation, was 0.4 percentage points lower than the figure in June.

The easing inflation is explained as a result of the base effect. The CPI growth rate hit a 37-month high of 6.5 percent in July last year before gradually retreating as China's economy slowed for eight quarters in a row.

Food prices, which account for nearly one-third of the weighting in the calculation of China's CPI, edged up 2.4 percent in July from a year ago, down from a growth of 3.8 percent in June.

Food prices were mainly driven by an eight percent hike of vegetable prices, as rain and flooding affected vegetable production in many places in a traditionally peak season of supply.

Zhang Liqun, a researcher with the Development Research Center under the State Council, said abundant domestic agricultural production has helped stabilize prices. He called for more attention to be paid to severe ongoing droughts in the United States that are expected to impact China's edible oil and grain prices.

He said the CPI will continue to ease for the rest of the year and remain below three percent, well within the government's target of four percent for the year.

Although inflation has been relieved in the short-term, climbing costs will cause the CPI to surpass 2 percent before long, said Wang Jun, a researcher at the China Center for International Economic Exchange.

He also warned that deflation risks may arise if the government fails to effectively curb the economic slowdown.

Dwindling orders from Europe and other trade partners have sapped China's exports and, combined with a cooling property sector, slowed the country's economic growth rate to 7.6 percent in the second quarter, the lowest level since the first quarter of 2009.

To boost growth, the government has loosened the monetary supply, cut taxes for small businesses and encouraged private businesses to invest in sectors previously closed to them.

The central bank has cut its lending and deposit rates twice, lowered the amount of funds that banks must keep in reserve and is widely expected to further lower interest rates, as well as the reserve requirement ratio, in August.