Consumer prices dropped 0.9 percent last month from a year earlier, while in the first seven months of the year, they declined 0.8 percent from the same period in 2001, the National Bureau of Statistics said.

July's fall in prices follows a 0.8 percent decrease in June and is attributed to a host of factors, including China's entry last year into the WTO.

The accession last December has prompted a flurry of imports of cheaper foreign products and has forced local companies to slash prices to stay competitive, statisticians say.

Significantly, the prices of "transportation tools", which include cars, declined 5.3 percent in July from the same month last year, according to the bureau.

After joining the WTO, China made steep cuts in import duties on cars, setting off a round of price cuts among local car producers.

Import duties on cars of more than 3,000 cc were reduced to 50.7 percent from 80 percent and to 43.8 percent from 70 percent for cars with smaller engines, changes that took effect at New Year.

According to Tuesday's announcement, prices of telecommunications equipment fell by a precipitous 17 percent in July from a year earlier.

This is in line with remarks by government officials that new technological developments are pushing prices down in areas such as telecoms.

For example, mobile phone handset prices have fallen around 40 percent since the beginning of the year, according to previously published data.

Making up for the decline in prices of some consumer products, prices of services rose 1.5 percent in July from the same month in 2001, the statistics bureau said.

In particular, service prices were lifted by a 3.8 percent rise in housing rent, according to the bureau.

(China Daily August 14, 2002)