With the inflation easing, China’s policymakers have more room to spur economic growth.
The central bank has cut key interest rates twice since the start of June and it has also cut the amount of reserves the banks can hold, in order to boost lending.
Analysts said they expected more such moves to boost growth from the government going forward.
“A lower consumer price index opens room for further policy easing, which we expect will pick up,” said Zhang Zhiwei, chief China economist at Nomura in Hong Kong.
“We should increase the strength of policy fine-tuning,” he added. Fine tuning is an often-used term by Chinese policy makers to indicate that policy moves will be gradual.
China’s economy is currently growing at its slowest pace of 8.1% in almost three years.