Retail inflation eased to 5.59 per cent in July mainly due to softening food prices, according to official data released on Thursday.

The Consumer Price Index (CPI) based inflation was 6.26 per cent in June and 6.73 per cent in July 2020.

According to the data released by the National Statistical Office (NSO), inflation in the food basket slowed down to 3.96 per cent in July from 5.15 per cent in the previous month.

Earlier this month, the RBI projected the CPI inflation at 5.7 per cent during 2021-22 -- 5.9 per cent in the second quarter, 5.3 per cent in third, and 5.8 per cent in the fourth quarter of the fiscal, with risks broadly balanced. CPI inflation for Q1:2022-23 is projected at 5.1 per cent.

The Reserve Bank of India, which has been mandated by the government to keep the retail inflation at 4 per cent with 2 per cent margin on either side, mainly factors in the CPI-based inflation while deciding its bi-monthly monetary policy.