BEIJING, Aug. 9 (Xinhua) -- China reported positive signs in terms of both consumer and producer prices last month, as government policies to boost domestic demand continued to take hold.

The consumer price index (CPI), a main gauge of inflation, climbed 0.4 percent in July compared with the previous month, reversing a 0.1-percent drop in June and exceeding the average seasonal pace of 0.3 percent, data from the National Bureau of Statistics (NBS) showed Saturday.

On an annual basis, the CPI was unchanged in July, while the core CPI, which excludes food and energy, rose 0.8 percent -- a rising streak for three consecutive months.

NBS statistician Dong Lijuan said these positive trends were driven mainly by higher prices for services and industrial consumer goods, while emphasizing the effective role of policy measures in expanding demand.

China has intensified moves to bolster domestic economic circulation this year, including stronger fiscal support for consumer goods trade-ins nationwide and strengthened focus on key service sectors such as elderly care, childcare and digital consumption.

Saturday's data also revealed improved signs in the industrial sector. The producer price index (PPI), which measures costs for goods at the factory gate, fell 0.2 percent from a month earlier in July -- an improvement considering the 0.4 percent-drop recorded in June, while also marking the first month-on-month narrowing since March. Compared with the same month in 2024, the PPI slid by 3.6 percent in July, the same as in June.

Dong attributed the improving PPI performance in part to optimized market competition order, ongoing industrial shifts and unleashed domestic demand potential.

China's price levels have remained subdued this year due to both global headwinds and the country's ongoing economic transformation.

According to Sheng Laiyun, deputy head of the NBS, China is at a critical stage of economic transition and upgrading. Prices of products related to traditional growth drivers, such as steel, cement and other building materials, are experiencing adjustments, while those related to new growth drivers, such as high-tech products and products involving sophisticated technology, are going upward.

Analysts expect prices to stage a mild recovery in the second half of the year, as positive factors, including a steady economic outlook, effective policies aimed at boosting domestic demand, and seasonal factors during the summer vacation, the Mid-Autumn Festival and National Day holidays, are likely to spur consumer demand and help stabilize or lift prices.

Wen Bin, chief economist at China Minsheng Bank, said that government efforts to curb rat-race competition among companies will encourage more orderly and rational market behavior, which could accelerate a healthy cycle of supply and demand and further support price recovery.

Earlier data showed that China's consumer market had maintained an upward trend, with retail sales of consumer goods expanding 5 percent year on year in the first half of 2025. In this period, China's economy grew by 5.3 percent.