China's inflation rate is likely to fall below 2 percent in July, a media report said Sunday.

The consumer price index (CPI), a key gauge of inflation, will rise 1.7 percent year-on-year in July, slower than the 2.2-percent growth seen in June

The Bank of Communications and the Industrial Bank in their monthly reports attributed the easing of inflation to the "base effect", the China Daily reported. 

The CPI growth rate hit a 37-month high of 6.5 percent in July last year before gradually retreating as China's economy slowed for eight quarters running.

The inflation rate will remain at around 2 percent through the third quarter if no new factors emerge to drive prices up, the Communications bank projected.

Food prices, which account for nearly one-third of the prices used to calculate CPI, may stay flat in July. 

This is because rains and floods have affected vegetable production in many places in a traditionally peak season of supply, the daily said.