Step 1: Recall the function of a diffuser.
A diffuser is a flow passage designed to reduce the velocity of a fluid.
Step 2: Determine its primary purpose.
As the fluid velocity decreases,
\[
\boxed{
\text{kinetic energy is converted into pressure energy.}
}
\]
Thus, the static pressure increases.
Therefore,
\[
\boxed{\text{Increase pressure}}
\]
is the correct answer.
Thus,
\[
\boxed{(C)}
\]
is the correct answer.