China announced Thursday morning that its inflation cooled for a fourth straight month in July, providing more room for Premier Wen Jiabao to loosen policies to stem a growth slowdown.

Consumer prices rose 1.8 percent from a year earlier, the National Bureau of Statistics said in Beijing, Bloomberg reported. That compares with the 1.7 percent median forecast in a Bloomberg News survey of 33 economists and a 2.2 percent gain in June. Producer prices fell 2.9 percent from a year earlier, the fifth straight drop, the report showed.

The deceleration in price gains may encourage more measures to support growth, aiding Wen's efforts to reverse an economic slowdown that's lasted six quarters. Communist Party leaders last week pledged to keep adjusting policies to ensure stable expansion this year.

"Falling inflation is creating more room for further policy easing," Ding Shuang, a Hong Kong-based economist with Citigroup Inc., told Bloomberg before the release. "Sustained policy support is needed to engineer a growth rebound in the second half."

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