China's consumer price index remained on the upside last month, rising 6.5 percent from a year ago - the most in 37 months - and above market estimates of 6.2 to 6.4 percent.

The rise may embarrass some officials, who earlier said CPI would peak in June. The pricing gauge, after a 6.4 percent gain in June, was hit by higher food and dwelling costs.

Food prices rose 14.8 percent year-on-year last month, compared with a 14.4 percent rise in June.

Pork prices were up 56.7 percent. This slowed from 57.1 percent in June. Non-food inflation moderated to 2.9 percent in July on year, slightly down from a 3 percent rise in June. However, housing costs rose 5.9 percent, driven by higher costs of electricity, raw materials and rents.

The producer price index last month rose 7.5 percent from last year, higher than a 7.1 percent gain in June. The higher PPI is due to increased mining and raw material costs.

"Pressure of producer prices is expected to ease on softening commodity and oil prices, which might fall towards the end of the year [due to global weakness]," Moody's Analytics said, adding this will help take pressure off the CPI.

July's CPI figure will likely mark the peak, with the headline figure to moderate in the following months, JPMorgan said in a report.

"We expect the moderation [in the CPI] to become more notable from October onwards, and likely to end the year at about a 4.3 percent rise on year," the investment house said.

Moody's also forecast inflation to slow by year end, given weakening money growth and bank lending, as well as stabilized food prices in recent weeks.

The latest figures sparked diverse views on further tightening measures.

Chang Jian at Barclays Capital said July's inflation might trigger one more interest rate increase in the third quarter, but the weakening global economy will "reduce probability of the hike."

However, Australia and New Zealand Banking Group expects the central bank to take a looser stance by reducing reserve requirements for banks and cutting interest rates in a bid to stimulate economic growth in the event of global recession.