Hong Kong's deflation eased slightly last month after peaking at a three-year high in July, with prices starting to firm up for jewellery, package tours, clothes and shoes. The composite consumer price index, which measures costs for a basket of goods and services, fell 3.8 per cent last month compared to the same period last year. August's CPI decline marks the 58th consecutive month of deflation for Hong Kong, although the sharper falls in recent months have been caused by government relief measures. Stripping out those effects, deflation would have been 2.7 per cent, the government said. 'The government's relief measures, namely the rates concession and the waiver of water and sewage charges, were posing an appreciable downward effect on the CPI,' it said. 'This apart, lesser price declines were seen for some of the components of CPI.' Hong Kong's prices have been falling for nearly five years, one of the longest deflationary periods in post-second world war history. The deflation has been blamed on the three recessions Hong Kong has suffered since the 1997-98 Asian financial crisis. A falling unemployment rate and higher visitor numbers may help stop the price declines, analysts say. Kevin Lai, an economist at National Australia Bank, said the rate might get better in a month or two. Deflation 'would be normalised, hitting a level around 2.5 per cent by October' because there would be no more government concessions, Mr Lai said. 'There's a bit of pricing power coming back to the retail levels as a result of the influx of tourists, mainly Chinese tourists, and also as a result of the post-Sars recovery in domestic spending,' he said. Mr Lai added that deflation would not end completely until competitiveness was fully restored. For the first eight months of the year, Hong Kong prices have fallen 2.6 per cent year-on-year.