India's food inflation eased to 4.35 percent in the year to December 3 - its lowest reading since late February 2008 - from an annual 6.60 percent rise in the previous week, government data showed on Thursday.
The annual fuel inflation eased marginally to 15.24 percent in the latest week, data showed, against 15.53 percent in the previous week.
The primary articles price index was up 5.48 percent, compared with an annual rise of 6.92 percent in the prior week.
Chief economic adviser Kaushik Basu said on Wednesday that he expected food inflation to drop to 3 percent within a month.
India's headline inflation has stayed above 9 percent for a year, despite 13 rate increases by the central bank since March 2010.
The Reserve Bank of India, which is widely expected to keep rates on hold when it reviews monetary policy on Friday, had said in its October review that if inflationary pressures started to abate by December, more rate increases may not be needed.