China's inflation rate may drop below 2 percent for the first time in nearly three years, leaving more space for the country to roll out fresh supportive policies to spur growth, analysts said before key economic data is released next week.

The Consumer Price Index, the main gauge of inflation, may expand 1.7 percent from a year earlier in July, said Lu Zhengwei, chief economist at Industrial Bank Co Ltd.

Tang Jianwei, an analyst at Bank of Communications, also said CPI growth is likely to moderate to around 1.7 percent.

"Summer is a season when the food supply is sufficient, which helps to ease the increase of consumer prices," Tang said. "However, there still exist tail risks of a CPI rebound in the coming months due to the impact of storms and floods in some places that may disrupt production and logistics."

In June, the CPI grew at 2.2 percent, the slowest pace in 29 months due to cheaper food.

Meanwhile, economic data for July may provide new evidence of a stabilizing economy, analysts said.

Industrial Bank's Lu predicted that industrial production growth will likely recover to 9.7 percent in July, compared with June's 9.5 percent rise, while fixed-asset investment may also quicken by 0.1 percentage point from a month earlier to 20.5 percent in July.

"China has accelerated approvals of certain investment projects concerning airports, power stations and railways. The initial efforts can be reflected in July's data," Lu said.

The official Purchasing Managers Index, a gauge of manufacturing activities, rose at its slowest pace in eight months in July. But its reading of 50.1 suggested modest expansion in the sector. Some economists regarded it as a sign of a stabilizing economy.

But exports and imports are likely to remain weak with single-digit growth in July, analysts said.

Chang Jian, a Barclays economist, estimated exports may increase 8 percent year on year in July, slower than June's 11.3 percent, while imports would remain flat at around 6 percent.