CHINA'S consumer prices increased 1.8 percent in July year on year, the slowest growth in two years and a half, paying the way for the central government to unveil more policies to boost the economy.

The rise in the Consumer Price Index, the main gauge of inflation, compared with a 2.2 percent gain in June and was the smallest since February 2010, according to the National Bureau of Statistics. The Producer Price Index, which measures factory-gate inflation, dropped 2.9 percent last month from a year before.

China's consumer prices have been on a downtrend from a three-year high of 6.5 percent in July 2011. The central government has set a target of 4 percent for the consumer price increase this year.

China has already started to boost the economy by lowering interest rates and cutting banks' reserve requirement ratios this year. Analysts noted that more pro-growth measures may be pushed forward in the coming months to counter weak external demand.

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