BEIJING, Aug. 9 (Xinhua) -- China's consumer prices maintained a moderate increase overall in July, pointing to ample room to introduce pro-consumption policies in the second half of the year.

The country's consumer price index (CPI), a main gauge of inflation, rose 0.5 percent year on year last month, according to data released by the National Bureau of Statistics (NBS) on Sunday.

The core CPI, which excludes food and energy prices, increased 0.9 percent year on year, data showed.

The year-on-year CPI growth narrowed by 0.5 percentage points from June, mainly due to a slower increase in gasoline prices, said Dong Lijuan, an NBS statistician, adding that gasoline prices rose 1 percent year on year, with the growth rate plunging 16 percentage points from the previous month. This reduced its contribution to headline CPI growth by about 0.45 percentage points from June, pulling the overall energy price growth down to 0.6 percent.

Industrial consumer goods excluding energy rose 1.5 percent year on year, slowing by 0.2 percentage points from a month earlier, contributing about 0.37 percentage points to the CPI growth.

Service prices increased 0.7 percent year on year, down by 0.1 percentage points from June, contributing about 0.36 percentage points to the CPI growth. Food prices fell 1.5 percent year on year, narrowing the decline by 0.1 percentage points from the previous month, dragging the CPI down by about 0.25 percentage points.

On a month-on-month basis, the CPI edged down 0.1 percent in July, with the decline narrowing by 0.2 percentage points from the previous month.

Dong attributed the monthly decline to international market price fluctuations, which drove down domestic gasoline prices by 10.7 percent month on month, with the decline widening by 5.8 percentage points from June, pulling the CPI down by about 0.35 percentage points.

Food prices remained flat month on month, 0.6 percentage points below the seasonal average. Service prices, which were flat in June, turned to a 0.4 percent monthly increase, pushing up the CPI by about 0.21 percentage points.

There is considerable room for pro-consumption policies in the second half of the year, and price factors in particular will not be a major constraint on the central bank's potential interest rate cuts, said Wang Qing, chief macro analyst at Golden Credit Rating.

The Political Bureau of the Communist Party of China Central Committee recently held a meeting on economic work. At the meeting, it was stressed that macro policies should be strengthened and more effective, disbursement of fiscal funds and bonds proceeds should be accelerated, and solid progress should be made in promoting large-scale equipment renewals and trade-ins of consumer goods.

The meeting also underscored the need to effectively expand domestic demand, increase the supply of quality goods and services in response to the consumption needs of different groups, and tap the potential of services consumption.

Local authorities have stepped up efforts to optimize trade-in policies. The southwestern city of Chongqing, for instance, has expanded its subsidy categories for home appliances and smart home products, covering nearly all aspects of daily life. Hunan Province in central China added 10 new categories to its trade-in program, including smart service robots, smart door locks, smart air purifiers, and smart toilets.

Wen Bin, chief economist at China Minsheng Bank, said he expects pro-consumption policies to be stepped up in the second half of the year, with summer vacations and the National Day holiday boosting prices in tourism, accommodation, and catering services.

Sunday's data also showed that China's producer price index, which measures costs for goods at the factory gate, went up 3.5 percent year on year in July.

"Although the transmission of PPI recovery to CPI will entail a lag, the equipment renewal and trade-in policies will gradually lift prices of durable consumer goods such as home appliances and automobiles," Wen added.