Chinese prices continued to fall in July from a year earlier, reducing the likelihood that Beijing will soon adjust its policy of boosting growth with easy credit and surging infrastructure spending.

According to data released by the National Bureau of Statistics on Tuesday, China's consumer price index fell 1.8 per cent while the producer price index was down 8.2 per cent from a year earlier, despite a flood of bank lending and investment in recent months.

Fixed asset investment rose 32.9 per cent from a year earlier in July while industrial output expanded by 10.8 per cent, the fastest rate in nine months. The figures provided further evidence of recovery in China's economy, which has come largely as a result of government investment and state-directed lending that saw new bank loans triple in the first half from the same period last year.