But economists think that the fall in prices will not be steep or sustained enough to hurt Singapore's economy.

Inflation fell last month for the fifth time in a row, largely due to lower housing costs as rebates were given out for service and conservancy charges.

The consumer price index (CPI) declined by 0.4 per cent over February, on the back of a 1.7 per cent fall in housing costs, said the Department of Statistics (DOS) in a statement on Thursday.

Cheaper cars and petrol also meant that the cost of transportation and communication slid by 0.6 per cent.

But compared to the same time last year, the CPI was still 1.6 per cent higher, said DOS. Housing, food, healthcare and recreation were all more expensive last month than a year ago.

Singapore's inflation has been on the downtrend since peaking at a 26-year high of 7.5 per cent in April, May and June last year.

The CPI for the first quarter of 2009 was 2.1 per cent higher compared with the same quarter a year ago.

Most economists believe inflation will be negative for the full year, due to falling commodity prices in the recession and partly because of the high base last year. This gives more room for the Monetary Authority of Singapore to allow the Singapore dollar to depreciate further at its regular policy meeting next month, they said.

A weaker currency helps exports but generally leads to inflation. In this disinflationary environment, however, that danger is lessened.