Weak September consumer price data in China and Europe has stoked fears price growth may be slowing longer-term in a sluggish global economy, as low interest rates fail to stir economic activity.
Chinese inflation slipped to 1.6 per cent in September from 2 per cent in August, well below the government's target of 3.5 per cent, prompting calls for further monetary policy easing.
Consumer price growth in the United Kingdom hit a five-year low of 1.2 per cent, dispelling any prospect of an imminent rate rise. Prices fell 0.4 per cent in Sweden, marking the country's 16th month of deflation in the past two years.
Germany's inflation was steady at 0.8 per cent after its government revised the country's 2014 growth forecast to 1.2 per cent from 1.8 per cent.
ANZ chief economist for greater China, Liu Li-Gang, said the sharp deceleration in China's CPI was due to "surprisingly low" food prices in autumn.
He also said the government's anti-graft campaign, a crackdown on corruption and excess, could have "significantly eased upward pressures on prices" - a question the Economist raised in August.
Capital Economics' China economist Julian Evans-Pritchard said he was "not yet concerned about deflation risks", although China's 1.6 per cent inflation figure had come in lower than expected.
Producer price inflation in the country fell deeper into the red, with prices down 1.8 per cent as producers paid less for oil and coal.
But that "shouldn't be seen as a sign of distress in the industrial sector", Mr Evans-Pritchard said.
Worldwide, inflation is running below targets, with China's slowdown, falling commodity prices and concerns about weakness in the global economy.
"Inflation looks as though it's falling in a range of different countries. Most vividly that fall has been in Europe," said Paul Bloxham, chief economist at HSBC. Eurozone inflation is running at 0.3 per cent, down from 0.5 per cent in May and well below the European Central Bank's target of 2 per cent.
"Perhaps a little more worrisome, the market is starting to not believe the ECB will hit its target," he said.
It is not just in Europe that markets are sceptical about inflation forecasts. Expectations have plummeted in the US, as measured by the five-year Treasury break-even rate, which fell to 1.52 per cent on Tuesday, largely on account of low commodity prices and flat wages.
Brent Oil tumbled to below $US85.50 a barrel on Tuesday after the International Energy Agency said demand would grow at its weakest pace in five years.
US prices have grown about 1.7 per cent this year, prompting suspicion the Federal Reserve will keep interest rates low for longer.
"It's becoming increasingly more difficult to be a hawk, given what's going on with inflation," Kevin Giddis, head of fixed-income capital markets at Raymond James & Associates Inc, told Bloomberg this week.
"We are in a longer-term disinflationary cycle that is likely to keep rates low for some time."
Last week the International Monetary Fund cut its Eurozone growth forecast to 0.8 per cent for this year and 1.3 per cent for 2015.
Deflation was evident in some UK sectors after the cost of fuel fell 6 per cent in September and food prices declined 1.5 per cent, the BBC reported.
Wages have posed a problem on both sides of the Atlantic. UK incomes failed to keep pace with the country's modest inflation rate, climbing just 0.7 per cent in the 12 months to July.
Unemployment dropped to 5.9 per cent in the US last month, but average hourly earnings were steady and wage growth has failed to keep pace with the recovery.
On Tuesday the president of the San Francisco Fed, John Williams, told Reuters the bank would likely delay lifting rates if inflation or wages failed to climb.
"If we don't see any improvement in wages, that would be a sign that we still have a lot of slack in the economy and we are not getting any inflationary pressure to move inflation back to 2 per cent," he said.
Paul Bloxham said he still expected the Fed to begin lifting rates from the second quarter of 2015, but warned deflation now posed a "significant risk" in Europe.
"The thing that we think will help them out and prevent them from moving into deflation will be a lower euro. We've already seen a bit of a sell-off in the euro over the past couple of months," he said.
Senior economist at JPMorgan, Ben Jarman, pointed out weak inflation figures had followed a period of higher-than-expected price growth.
"We're almost viewing this as a payback for the first half of the year," he said.
"It gives a bit of a free kick to the global consumer but we're starting to ask more questions about whether this is something more dangerous."
Tightening labour markets in the US and UK should have flown through to wages and business confidence by now, he said. Low commodity prices played a part in keeping inflation down but "even accounting for that, they're probably weaker numbers than we've been expecting".
