Food price inflation has been in double digits all year, causing hardship for India's impoverished masses and heaping pressure on the Congress-led government reeling from graft scandals and charges of policy paralysis.
Annual food inflation dropped to 1.81 percent for the week ended December 10 from 4.35 percent in the previous week, as prices of essential produce such as vegetables, onions, potatoes and wheat fell sharply.
The latest figures were the lowest since February 2008 when food inflation -- measured by the benchmark Wholesale Price Index -- stood at 2.26 percent.
Onion prices have fallen by nearly 50 percent from a year earlier while potatoes are 34 percent cheaper, helped by a bountiful monsoon. But widely consumed pulses, such as lentils, are still 14 percent higher than a year ago.
The drop in food inflation comes after figures earlier this month showed annual headline inflation fell to a year's low in November of 9.11 percent after crossing 10 percent in September.
India's central bank has raised interest rates 13 times since March 2010, angering business leaders who complain it has hit economic growth and investor confidence in the South Asian giant.
India's government expects the economy to grow by 7.5 percent this year, down from its earlier estimate of 9.0 percent.
Strong growth is seen as essential to improve the lives of India's 1.2 billion people, 75 percent of whom live on less than $2 a day.
The central bank said earlier this month that in view of the declining inflation "further rate hikes might not be warranted" in the months ahead.