The April figure represents the lowest number of bankruptcy filings since the same month in 2001, when 647 people filed for bankruptcy. The number of bankruptcy orders granted in April also fell to 1,134, down from 1,518 in March.

The rate of deflation - falling prices - slowed last month. The Census and Statistics Department said the composite consumer price index (CPI) fell 1.5 per cent last month, less than the 2.1 per cent fall in March.

The CPI tracks price changes for a basket of commonly used goods and services.

Andy Kwan Cheuk-chiu, associate professor of economics at Chinese University, said the economy was on track to recovery, and deflation would end much earlier if world oil prices remained high.

'The new figures indicate the economy is recovering while prices are rising. I expect deflation will end as early as the late third quarter under the strong consumer demand from mainland tourists, gradual improvement in the property market and rising oil prices.'

But Professor Kwan warned that measures to cool the mainland economy might have helped deflation because this could have suppressed the price rises of some raw materials.

The government attributed the slower decline in the CPI to an increase in charges for package tours, as well as the price of jewellery and basic foodstuffs.

It also noted slower declines in rents for private housing, and charges for telephone and other communications services.

Bankruptcy petitions foreshadow whether the number of bankruptcies granted will rise or fall in the coming months, because petitions usually take several months to go through the courts.

The number of bankruptcies in Hong Kong rocketed in 2002 and in the early part of last year, as the economy crashed, pushing people out of work and leaving them unable to pay their bills. Many turned to credit cards and racked up large debts, forcing them into bankruptcy.

But as Hong Kong's economy has improved, so have the bankruptcy figures. The number of monthly bankruptcy filings hit a peak of 2,441 in November 2002, while 3,193 bankruptcies were granted in January last year, the highest month on record since 1998.

After five years of falling prices in Hong Kong, the slowing decline in the CPI also brings hope of a better economic situation when the prices of goods and services in the city finally begin to rebound.

While falling prices may be good for consumers in the short term, deflation has harmed investment and the growth of jobs.

Joseph Yam Chi-kwong, chief executive of the Hong Kong Monetary Authority, said on Thursday he was certain the bout of deflation was already over, with the CPI expected to begin rising by July.

On Tuesday, the government announced Hong Kong's unemployment rate fell to 7.1 per cent last month, a 17-month low, as booming tourism and improved consumer spending helped spur job creation.