PRICE rises in Hongkong have fallen to their lowest level since December 1988, putting the Government back on target to hit single figure inflation this year. The March rise in prices fell to 7.8 per cent against the 8.6 per cent increase recorded by the Consumer Price Index in February. There was also an improvement in the CPI (B) Index, where price rises slowed from 9.25 per cent to 8.5 per cent. It was not all good news on inflation. The Hang Seng Consumer Price Index rose from 9.1 per cent to 9.2 per cent. The composite index, combining all three, showed a fall from 8.9 per cent in February to 8.4 per cent in March. Yesterday's figures confirm that the 10.1 per cent jump in the CPI (A) in January was a blip, triggered by Lunar New Year spending. The Financial Secretary, Mr Hamish Macleod, gave a cautious welcome to the latest figures, and pointed out that they continued an improving trend. ''Consumer price inflation in the terms of the CPI (A) stood at 8.8 per cent in the first quarter this year. This represented an appreciable drop from 9.4 per cent in the fourth quarter last year,'' he said. Describing the improvement as ''encouraging'', Mr Macleod said 9.5 per cent still seemed a realistic forecast for 1992 as a whole. The Government's willingness to run a deficit, plus the possibility of transport fare increases, sparked criticism that inflation would be further fuelled later this year. The biggest contribution to the better trend came from more favourable prices for vegetables, fish, poultry and other fresh produce, while increases in the cost of fuel, transport and clothing also slowed. Property prices, while down from the rate of 15 plus per cent seen in previous months, continued to show increases in all three indices, ranging from 13.9 per cent to 14.8 per cent, although the figure for the public sector rentals was distorted by the timing of periodical rent increases. In the Hang Seng CPI, which measures the life-style of Hongkong's better paid, the housing component rose by 0.9 per cent to 14 per cent year on year, reflecting rental increases following new tenancy agreements as well as higher maintenance charges. While healthy eaters were enjoying better value, those with decidedly western tastes were having to pay for their indulgences, as tinned meats, dairy products, European cakes and restaurant meals all cost relatively more last month. But the better figures received a guarded welcome from private sector economists who saw the fall as being due to special factors. Mr Ian Perkin, chief economist of the Hongkong General Chamber of Commerce, pointed out that, while the figures were encouraging, vegetables, fish and other produce had benefitted from the devaluation of the yuan. ''The Hang Seng is still going up, and that depends a lot less on food prices,'' he said. Mr Ranjan Pal, regional economist of Jardine Fleming, said the fall in food prices should be regarded as a windfall gain for Hongkong, triggered by the shift in the value of the yuan. Mr Jim Wong, of Hongkong Bank's economic department, supported the financial secretary's forecast that inflation would remain at close to single figures this year, but stressed there was still room for improvement.