The UK Consumer Price Index dropped to 0% in the year to June 2015, down from 0.1% in the year to May, the Office for National Statistics (ONS) has announced.

A fall in food and clothing prices caused inflation to drop again after a slight rise in the year to May. The ONS said there was a lack of upwards effects to offset the drag of clothing and food prices.

Food prices have weighed down inflation in the UK for months due to the competitive grocery market, which causes supermarkets to slash their prices to gain momentum.

The Institute of Directors (IoD) welcomed the figures, saying they will be a boost for businesses and households.

Figures by the ONS show that transport prices also dragged down the inflation rate, while hotel and restaurant prices saw the biggest rise.

IoD chief economist James Sproule, said: "The lower cost of essentials, such as transport, has given companies more money to invest, take on staff, pay down debts, increase wages or reduce prices. At the same time, lower household food and petrol bills are feeding through to higher disposable incomes, increasing consumer confidence and demand."

In April 2015, inflation, which is based on the price of a basket of goods and services turned negative for the first time since records began. Otherwise, the rate has hovered around the 0% point for months.

Chancellor George Osborne announced a nationwide living wage in the UK and the IoD says this policy "could eventually feed through to higher prices and reduce margins for some employers, so businesses should make the most of low inflation while it is here".