A report released by the government of China says the consumer inflation in the country rose to 1.6 percent last month, up by 0.2 percent compared to June.

According to the report, reduced downward pressure on prices was the main factor which helped the consumer inflation in the world's second-largest economy rise to 1.6 percent, AFP reported.

According to a report issued by the National Bureau of Statistics (NBS), the reading for the consumer price index (CPI), which is a main gauge of inflation, stood at 1.4 percent in June.

Experts generally believe that moderate inflation can be beneficial to consumption as it encourages consumers to buy before prices go up, while slumping prices cause shoppers to delay purchases, while prompting companies to put off investment, both of which can be detrimental to economic growth.

Slowing economic growth and decrease in commodity prices have worked to keep China's consumer inflation in control check. However, some analysts have raised the prospect of looming deflation due to apparent weakness in other price yardsticks.

According to NBS report, the producer price index – a method used to measure costs of goods at the factory gate and a leading indicator showing the general trend of CPI – declined 5.4 percent in July, compared with a 4.8-percent retreat in June, and marking the 41st consecutive monthly fall.