Chinese shares were up at the end of Monday's session, as softer-than-expected inflation data reinforced expectations Beijing may introduce fresh stimulus to revive lackluster domestic demand.

The Shanghai Composite Index, the main gauge of Chinese stocks, closed 0.7% higher to 3,966.59. The Shenzhen Component Index ticked up 5.95 points to 14,348.95.

China's annual consumer inflation eased to 0.5% in July, below the 0.8% consensus forecast tracked by Investing.com and down from June's 1.0% reading. The print marked the weakest pace in six months. Core inflation, which strips out volatile food and energy costs, also slowed to 0.9% from 1% in June, matching its softest level in half a year.

Producer inflation decelerated to 3.5% in July, lower than the 3.8% forecast and June's 4.1% rate.

Nanhua Futures noted that July's economic data will be pivotal, with widespread signs of weakness likely prompting Beijing to deploy new stimulus measures around late September, Reuters reported.

Meanwhile, China's foreign exchange reserves rose 0.07%, or by $2.5 billion, to $3.419 trillion in July from $3.416 trillion in June, undershooting the consensus forecast of $3.420 trillion.

In company news, ACM Research Shanghai (SHA:688082) posted first-half attributable net profit of 988.9 million yuan, up 42% from 695.8 million yuan the previous year. Shares of the semiconductor device manufacturer rose 9% Monday.