China's consumer price index (CPI), a main gauge of inflation, rose 2.6 percent year on year in August, down from 2.7 percent in July, the National Bureau of Statistics (NBS) said on Monday.
The country's consumer inflation has stayed between 2 percent and 3.2 percent this year, well below the government's full-year target of 3.5 percent.
Last month, food prices rose 4.7 percent year on year, while prices of non-food products were up 1.5 percent, the NBS said in a statement on its website.
Average consumer prices in the first eight months rose 2.5 percent from the same period of last year, according to the statement.
Niu Li, an expert with the State Information Center, attributed the slight drop mainly to a weakening carryover effect, as last August's inflation was slightly higher than that of July.
The bureau estimated that the carryover effect dropped 0.7 percentage points from July to 1.1 percent in August.
The data also showed China's producer price index, which measures inflation at the wholesale level, fell 1.6 percent in August from the same month last year.
The pace of decrease has eased for three straight months, adding to evidence that the national economy was strengthening.
China's economic growth eased to 7.5 percent in the second quarter of 2013 from 7.7 percent in the first quarter and 7.9 percent in the final quarter of 2012.
The country's purchasing managers' index for the manufacturing sector rose to 51 percent in August, the highest level this year.
Niu said the present low prices offer ample room for the country's monetary policies and allow the country to take flexible pro-growth measures.
Wang Xiaoguang, an expert with the Chinese Academy of Governance, also said that steady consumer inflation will help stabilize the macroeconomic environment for China.
As the country's CPI has stayed in a low range for about two years, companies are likely to have a positive outlook for future development, Wang said.
"Steady prices will help improve the profitability of companies and allow them to make plans for long-term production and investment," he explained.
By midday on Monday, Chinese stocks had surged more than 2 percent due to the positive signals from the NBS data.
The benchmark Shanghai Composite Index had climbed 3.03 percent to 2,204.75 points by midday, while the Shenzhen Component Index surged 2.74 percent to 8,507.32.
