The rate edged up to 1.6% from 1.4% the month before because of rising food prices, the government said.
Producer prices, which include wholesale and factory price inflation, fell for the 40th month in a row.
Analysts say the data points to the need for measures to stimulate the world's second-largest economy.
The producer price index was down 5.4% from a year earlier - it had been expected to fall by just 5% in July.
China's
central bank has cut interest rates four times since November last year
in an effort to boost economic activity. But Zhou Hao, economist at
Commerzbank in Singapore, said it would probably need to do so again.
