After the mission at Sector 5 Reactor in Chapter 7 of Final Fantasy VII Remake, Cloud will fall into the Church that allows him to meet Aerith properly for the first time finally. Once there, you’re going to have to contend with some Shinra guards and Reno from the Turks as they attempt to kidnap Aerith.
Here, you’ll experience one of the new boss battles in the game in Reno, who poses a fairly good threat and requires some patience to beat as he will dodge most of your attacks. After the fight, though, Cloud and Aerith retreat to the back of the church, and here is where you’ll find that the church is surrounded by the black hooded ghosts, who are ushering you to climb the building. However, on the ground floor, you will be able to see a pathway that is has a yellow materia there, waiting to be picked up. You also see it again in the cutscenes as Aerith evades capture from Reno.
However, if you try to go down the corridor, the ghosts will block your way, leaving it inaccessible and meaning you will go right past it.
Never fear, however, as this is not where you’re meant to be able to pick this up. As you progress through the chapter, the path to the church will be continuously blocked, so you can’t go and pick it up.
However, once you have completed the mission of rescuing the kids, which will unlock side quests to do around the slums, and unlocked the Moogle Medal shop, the path to the slums will be accessible again to the church, allowing you to go ahead and pick up the yellow materia from the church. The materia is Chakra, the same as the one that Tifa has when you unlock her, allowing you to heal a certain amount of the damage you have taken.