The annual consumer price inflation eased more than expected to a 24-month low of 8.79 per cent in January, helped by moderating food prices, government data showed on Wednesday.
A Reuters poll had forecast retail inflation would slow to 9.40 per cent from an annual 9.87 per cent in December.
Food prices for consumers rose 9.90 per cent last month from a year earlier, much slower than December's 12.16 per cent rise.
The Reserve Bank of India has raised its benchmark interest rate three times since September in a bid to tame stubbornly high inflation.
Last month, a central bank panel proposed revamping its policymaking structure by setting a long-term retail inflation target of 4 per cent, plus or minus 2 per cent. In the intermediate term, it proposed the goal would be to bring it down to 8 per cent by January 2015 and 6 per cent by January 2016.
The RBI expects retail inflation to stay above 9 per cent in the quarter through March.