Step 1: Recall the function of a diffuser.
A diffuser is designed to reduce the velocity of the incoming flow.
As the velocity decreases,
\[
\boxed{
\text{kinetic energy is converted into pressure energy.}
}
\]
Step 2: Identify the thermodynamic purpose.
For subsonic flow,
\[
V\downarrow
\Longrightarrow
P\uparrow.
\]
Thus, the diffuser increases the static pressure before the combustion chamber, improving combustion efficiency.
Therefore,
\[
\boxed{\text{To increase static pressure by decreasing flow velocity}}
\]
is the correct answer.
Thus,
\[
\boxed{(C)}
\]
is the correct answer.