Economists say the sharp drop in inflation announced today could justify a further round of quantitative easing by the Bank of England.
Data from the Office for National Statistics show prices in the UK are rising at their slowest rate since the end of 2009.
The consumer price index dropped from 2.8% in May to 2.4% in June after a sharp drop the previous month from 3%.
Meanwhile the retail prices index, which includes housing costs, fell to 2.8% from 3.1%.
Falling prices for petrol, clothing and footwear, transport and food and drink all contributed to downward pressure on inflation.
Schroders European economist Azad Zangana said the fall came against city expectations of no change and reflected how the squeeze on household spending was forcing retailers to discount clothing and footwear.
He said: "Overall, the latest inflation numbers help justify the Bank of England's decision to expand its quantitative easing programme earlier this month, and could even lead the monetary policy committee to add further stimulus in the future."
The Bank of England expanded its asset-purchase programme just two weeks ago to £375bn amid industry warnings that the move would deteriorate scheme funding positions and force companies to plug rocketing deficits.
UBS economist Amit Kara said further QE was "likely" as a result of the downward pressure on inflation, but a rate cut still remained extremely unlikely in the short term.
He said: "Inflation has surprised the MPC on the downside and although the headline CPI rate still remains above 2%, the outturn will likely raise the prospects for further monetary policy stimulus, either by way of more QE or even a rate cut."
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