Mike Hardie, head of inflation at the ONS, said: "The fall in inflation is due mainly to cheaper gas, electricity and petrol, partly offset by rising ferry ticket prices and air fares falling more slowly than this time past year".
Retail inflation stood at 2.05 percent in January 2019 compared with a revised 2.11 percent in December 2018, according to data by the Ministry of Statistics and Program Implementation.
Meanwhile, the top five year fix offers 2.68 per cent from the same bank, or now, 0.88 percentage points beyond the CPI measure.
Consumer-price growth reached 2.05 percent in January, well below the Reserve Bank of India's medium term target of 4 percent.
Currency analyst of OFX Hamish Muress said the inflation rate, along with growing retail prices would have caused volatility for the pound "in a time gone by" but said that Brexit was now dictating the agenda.
Separate official data showed growth in industrial production - determined by Index of Industrial Production (IIP) - picked up to 2.4 per cent in December. India imports almost 80 percent of oil it consumes.
Howard Archer, the chief economic adviser to the EY Item Club, said he expects inflation to stay modestly below 2% for much, if not all, of 2019: "We see inflation averaging 1.8% over 2019 and it could very well get as low as 1.6% during the year".More news: Apple iPhone sales fall by 20 percent
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"This reinforces expectations of a rate cut in April", he added. Growth in the mining sector declined 1%.
Prime Minister Narendra Modi, who faces tough general elections by May, has announced an annual transfer of 750 billion rupees ($11 billion) to millions of farmers, and tax benefits for the middle class, which many economists say could spur both consumer spending and inflation.
Inflation was dragged down by lower electricity, gas and petrol prices between December and January, which was partially offset by lower air fares.
RBI Governor Shaktikanta Das has downplayed the risk India could soon see higher inflation because of bigger budget spending, and has said the MPC would only look at the headline inflation number and ignore core inflation, which has stayed stubbornly high.
Last month, 106 accounts matched or beat the CPI but that has more than doubled to 245 after the drop. The figures show rural incomes remain under pressure while consumers benefit from easing inflation.
A Reuters poll of economists had forecast 1.9 percent. The central bank also changed its policy stance to "neutral" from "calibrated tightening", a shift that allows it to act either way on the key rates.