The wholesale price index, India's most closely watched cost-of-living monitor, showed inflation stood at 4.03 percent for the week ended March 10, down from 4.28 percent the previous week and 5.5 percent a year earlier.

The latest figure was below the central bank's inflation target for the current financial year of close to 5.0 percent and marked the tenth consecutive weekly drop.

The fall was driven by a drop in food prices, such as pulses, and some manufactured goods.

Inflation has emerged as a major political issue in the country because of its burden on India's millions of poor households.

Earlier in the week, Finance Minister P. Chidambaram said central bank tightening and a sharp appreciation of the Indian rupee had helped subdue inflation and more interest rate rises might not be needed if the trend continued.