China's consumer price index (CPI) grew 1 per cent year-on-year in July, compared to 1.5 per cent in June, the National Bureau of Statistics said on Friday.

But the producer price index (PPI), which better reflects the price movements of major production materials, saw faster growth last month  3.6 per cent compared to the same period last year, up from 3.5 per cent annualized growth in June.

Meanwhile, the procurement prices of raw materials, fuel and power surged 6.7 per cent year-on-year in July, up from June's 6.6 per cent growth.

The contrast between the movements of the two indices is largely because food accounts for a large proportion of CPI, China's major inflationary barometer.

Food prices only grew by 0.6 per cent year-on-year in July, with the prices of edible oil, meat, eggs and vegetables down 3.3 per cent, 7.1 per cent, 12.9 per cent and 3.5 per cent, respectively.

Such seasonal fluctuations of food prices are normal, said Zhu Jianfang, a macroeconomics analyst at Beijing-based CITIC China Securities.

And that pulled down the overall growth of CPI in July.

For other CPI constituents, the price of clothing declined 0.6 per cent year-on-year in July, while telecommunication prices also declined 17.8 per cent.

However, the prices of water, power and fuel continued to rise, increasing 5.3 per cent year-on-year in July.

Many production materials and fuel prices are still rising fast, Zhu said.

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