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AP, BEIJING -- China's politically volatile inflation eased in July as sharp rises in food costs slowed, according to data reported Tuesday, giving Beijing more leeway to try to boost slowing economic growth. Consumer prices rose 6.3 percent in July over the same month last year, the National Bureau of Statistics reported. That was driven by a 14.4 percent rise in foods costs, though that rate was down from 17.3 percent in June. The overall rate, the lowest in nearly a year, was a decline from June's 7.1 percent.
Chinese leaders have been trying for a year to rein in sharp rises in living costs with price controls and efforts to raise farm output. They worry that continued high price hikes could erode living standards, fueling public frustration and possible protests.
But Beijing's focus on inflation has been complicated by concerns about a slowdown in China's rapid economic expansion and weaker export growth. Communist Party leaders issued an economic plan last month that switched the government's focus from fighting inflation to the dual mission of ensuring fast, stable growth while also cooling price rises.
''Falling inflation suggests that the government's macro-tightening measures have been effective, which will both reduce investor fears of the possibility of policy missteps and increase the chances of a shift to targeted pro-growth policies,'' Jing Ulrich, JPMorgan Chase & Co.'s chairwoman for China equities, said in a report to clients.
China's inflation and how the government responds could have an impact on global markets as well as Chinese consumers. A decision by authorities to shift emphasis to economic growth could boost Chinese imports, narrowing the swollen trade surplus.
The economy grew by 10.1 percent in the three months ended June 30 -- the strongest rate for any major economy, but a decline from the previous quarter's 10.6 percent.
Economists expect Beijing to try to help individual industries with tax rebates or other targeted measures, rather than an across-the-board easing of credit controls and investment curbs that have been steadily ratcheted up over the past two years.
Economists expect consumer inflation to ease further, though the full-year rate should overshoot the government's target of 4.8 percent, coming in at up to 6.5 percent.
July's food price rise included a 30.8 percent increase for cooking oil, 16 percent for meat and 18 percent for fish, the statistics bureau said. It said July figures brought consumer inflation to 7.7 percent for the first seven months of the year, compared with the same period last year.
Analysts are watching inflation figures closely for signs of how Beijing will move on possible interest rate changes or its handling of China's currency, the yuan.
A stronger yuan would help to fight inflation by making Chinese goods more expensive abroad and slowing the flood of export revenues pouring into the economy. But the central bank has slowed the yuan's rise against the U.S. dollar in recent months, possibly to help struggling exporters.
On Monday, the government reported that wholesale inflation rose to a 12-year high of 10 percent in July, driven by sharp increases in the cost of energy and raw materials. That is expected to add to pressure on Chinese companies to pass on higher prices to consumers while also squeezing thin profit margins.
''The focus will now switch to the high cost of raw materials, where prices remain elevated despite coming off recent peaks,'' Ulrich said.
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