India's wholesale prices inflation rate fell to 7.48% in November from 8.58% the month before, figures show, in line with analysts' expectations.
Inflation had hit a two-year high this May of 10.16%, after food and fuel prices soared.
The price fall may mean the government can halt its recent run of rate rises. Interest rates have risen six times since the start of the year.
A key central bank monetary policy meeting takes place on Thursday.
The Reserve Bank of India has said bringing down inflation remains a priority, and it now expects inflation to fall to 5.5% by the end of the financial year next March.
Its ultimate aim is to get inflation down to between 4% and 4.5%.
The repo rate - the rate at which the central bank lends to commercial banks - currently stands at 6.25%.
Figures released two weeks ago showed India's economy had grown faster than expected in the second quarter of its financial year.
In the three months to September, gross domestic product (GDP) was up 8.9% from the same period last year.