The last official assessment of Zimbabwe’s inflation in July last year put the rate at 231 million per cent, a figure that independent economists saw as a gross understatement.
But the Central Statistical Office said it had stopped calculating inflation in Zimbabwe dollar terms since January when the government legalised the use of US dollars and South African rands for all trade.
Since that decision, the Zimbabwe dollar has disappeared from the streets. The central bank had been printing ever larger denominations into the trillions every few weeks, meaning even small purchases required staggering sums.
The statistics office said all inflation calculations would now be based in US dollars, and by that measure, prices have been declining all year.
"Prices as measured by the all-items consumer price index decreased an average of 3.1 per cent from January 2009 to February 2009," the agency said.
"The month-on-month inflation rate in February was -3.1 per cent, shedding 0.8 percentage points on the January rate of -2.3 per cent," it said.
Last week Finance Minister Tendai Biti said that by the end of year, annual inflation would be below 10 per cent.
Zimbabwe’s government no longer uses its own currency for any of its planning.
New Prime Minister Morgan Tsvangirai, who joined his long-time rival President Robert Mugabe in a unity government last month, has made a priority of rebuilding the shattered economy.
In a rare show of common purpose between Zimbabwe’s parties, Mr Mugabe and Mr Biti last week made a joint appearance at the launch of a new economic recovery scheme, which they hope will sway reluctant donors to give new aid and investments.
Once a regional model and food exporter, Zimbabwe’s economy has collapsed over the past nine years with runaway inflation and nationwide food shortages.
Zimbabwe’s neighbours are meeting on Tuesday in Swaziland to consider a request by Mr Tsvangirai for $US2 billion ($2.84 billion) in loans and aid. The unity government estimates it will need a total of $US5 billion ($7.09 billion) to get the economy back on track.
The government has already loosened price controls and some import restrictions which had distorted the local market.
The price controls had been blamed for undermining manufacturing as Mr Mugabe for years tried unsuccessfully to battle inflation by mandating prices below the cost of production.
The International Monetary Fund has sent a team to Zimbabwe to consider restoring normal relations after years of suspended ties.
But key donors including the United States and Britain say it is still too soon to give major financial support to the new government or to lift sanctions against Mugabe and his inner circle.
They say Mr Mugabe must prove his commitment to good governance, in part by releasing a dozen political prisoners still behind bars.