Consumer prices rose just 0.8 per cent last month from a year earlier, a significant easing from January when inflation was 3.1 per cent, the government said.
More moderate food price increases and housing rents accounted for the slower pace of inflation last month.
Economists, who had forecast an inflation rate of 1.3 per cent last month, do not expect serious inflation given the global downturn.
Inflation for the first two months of this year was 2 per cent.
This is a more accurate reading of consumer prices as January and February data are usually distorted by the different timing of the Lunar New Year holiday from year to year.
One-off government relief measures, such as the electricity charge subsidy, also affect the consumer price index. Without the measures, the inflation rate would have been 2.1 per cent last month and 3.3 per cent for the first two months of the year.
In December, inflation was 4.6 per cent after allowing for the effect of the relief measures.
'The easing trend in consumer price inflation in the first two months of 2009 was evident both from the year-on-year increase and the month-to-month rate of change,' a government spokesman said.
'This reflected the flexibility of local costs and prices to adjust in response to the economic downturn ... Inflationary pressure in Hong Kong [is expected] to recede further over the course of 2009, as the local economy comes under the increasing impact of the deepening global recession.'
Governments around the world are shrugging aside fears of mounting public debt and spending hundreds of billions of dollars in the hope of reviving the global economy.
The likely result of the unprecedented flood of liquidity is serious inflation once the recession starts to stabilise.
According to Census and Statistics Department data, housing prices rose 6.9 per cent last month and food was up 3.1 per cent. Alcoholic drinks and tobacco, clothing and footwear and transport all recorded inflation of less than 2 per cent.
Not surprisingly, electricity, gas and water charges fell dramatically because of the government subsidy, down 43.1 per cent, while durable goods prices fell 3 per cent.