"This [negative inflation] is still due to lower price levels of staple foods, new clothing materials and household fuel," the country's statistics bureau (UBOS) said.

There is a continued growth of the economy in the past year at 5.6%, and the currency has also remained stable

Mukund Rao Crane Bank in Kampala

Food makes up 45.2% of the index which has now recorded 10 consecutive months of negative inflation.

In May, the inflation rate was minus 2.4%.

"The production level has considerably gone up of food commodities like bananas," Mukund Rao, managing director of Uganda's Crane Bank in Kampala told the BBC's World Business Report.

"But there is a negative inflation rate because of deflation in the commodities market."

Economic outlook

Despite the ongoing deflation, the Ugandan economy has performed well over the past 12 months.

"There is continued growth of the economy in the past year at 5.6%, and the currency has also remained stable," Mr Rao said.

The annual underlying inflation rate in June, excluding food, dropped to 0.1%, with prices of new clothing and household fuel lower.

The cost of alcoholic beverages, water, health and education charges rose slightly.