Annual retail inflation in January rose 2.05 percent, its slowest pace since June 2017, government data showed on Tuesday.
The MPC, which mainly monitors retail inflation data, also revised down its inflation projections for the period from April to September to 3.2 percent to 3.4 percent, from 3.8 percent to 4.2 percent.
Inflation pressures have eased in recent months, following falls in food and crude oil prices. India imports nearly 80 percent of the oil it consumes.
Prime Minister Narendra Modi, who faces tough general elections by May, has announced an annual transfer of Rs 75,000 crore ($11 billion) to millions of farmers, and tax benefits for the middle class, which many economists say could spur both consumer spending and inflation.
Retail food prices fell 2.17 percent in January from a year earlier, compared to revised fall of 2.65 percent a month earlier. The figures show rural incomes remain under pressure while consumers benefit from easing inflation.