Consumer price inflation based on the consumer price index (CPI) stood lower at 7.80 in August 2014, against 7.96 per cent in July this year and 9.52 per cent in August 2013.
However, food inflation during August 2014 rose to 9.42 per cent from 9.36 per cent in July, official data released on Friday showed.
Inflation rate for rural and urban areas stood at 8.35 per cent and 7.04 per cent, respectively, in August 2014, against 8.37 per cent and 7.42 per cent in July.
The annual rate of increase in the prices of vegetables stood lower at 15.15 per cent in August against 16.88 per cent in the previous month.
The increase in the prices of cereals and its products also turned lower at 7.39 per cent and that for fuel and light came down to 4.15 per cent.
However, prices of fruits during the month reported an increase of 24.27 per cent.
Prices of milk and milk products increased by 11.7 per cent during August 2014, while those of pulses and its products went up by 6.88 per cent.
Prices of food and beverages remained little changed at 9.16 per cent, while the increases in the prices of non-alcoholic beverages were lower at 6.24 per cent in August.
Eggs, fish and meat were costlier at 7.71 per cent during the month.
Inflation in rural and urban areas in August was 8.35 percent and 7.04 percent, respectively. In July, it was 8.37 per cent and 7.42 per cent.
An easing in retail price rises is key to the Reserve Bank softening its high interest rate policy. The RBI is due to unveil its fourth bi-monthly monetary policy statement on 30 September 2014.