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The dark spectre of deflation is spreading across the English Channel from the sputtering economies of continental Europe. And it's once again hovering over Japan, which only recently seemed to be free of its long shadow.

The Bank of England has lowered its inflation forecast for the next two years and warned that the rate could temporarily slip below 1 per cent in coming months as a result of falling commodity costs and lower prices of euro-zone imports.

At the same time, softer domestic demand and weak (though improving) wage growth have restrained homegrown inflation, buttressing a dovish case for Britain to keep loose monetary policy unchanged much longer than the markets had anticipated.

In Japan, talk is swirling of a possible snap election, as the early benefits of the economic revival strategy dubbed Abenomics fade and the risks of renewed deflation loom larger.

The Japanese economy is expected to expand by a meagre 0.5 per cent in the current fiscal year. And it is losing ground on the inflation front, as consumer demand falters and business spending remains weak.

In Britain, the central bank now forecasts that consumer prices will rise at a mere 1 per cent annual rate in the first half of next year; and it doesn't expect to reach its target of 2 per cent before the last quarter of 2017 – and then only barely. Inflation rose 1.2 per cent on an annual basis in September, the lowest level in five years.

Yet the BoE incongruously clings to a relatively rosy view of the economy, leaving its growth forecast for this year at 3.5 per cent and reducing its projection for 2015 by a mere 0.1 percentage point to 2.9 per cent. That's particularly optimistic in light of the latest downbeat soundings from the domestic manufacturing, services and construction sectors and the worsening outlook for its major trading partners on the continent. Even powerful Germany is flirting with stagnation and disinflation.

"Developments in the world economy mean some of the downside risks to growth in earlier projections have crystallized," Bank of England Governor Mark Carney told a news conference in London after releasing the bank's latest quarterly inflation update.

"We're seeing obviously lower demand for our exports, which has consequences, and we're getting some imported disinflation from European exports," Mr. Carney noted, while lauding the European Central Bank's bolder stimulus efforts.

Indeed, both the ECB and the Bank of Japan have taken monetary easing into uncharted territory in an effort to steer clear of deflation's icy grip.

Having wrestled with the deflation demon for much of the past two decades, Japan ought to know by now that fiscal stimulus is a better solution when the private sector isn't borrowing or investing. But these days, that's a political non-starter just about everywhere.

"It's important for the BoJ to strongly commit to achieving its price target to get that price target firmly embedded in people's mindset," central bank chief Haruhiko Kuroda declared after persuading a thin majority of the bank's monetary policy board to approve a dramatic expansion of its monetary stimulus in response to "an alarming pattern" of inflation projections.

"It won't do much good in trying to shake off the public's deflation mindset if you just say inflation will reach 2 per cent some day," Mr. Kuroda said.

It's hard to dispute that logic. But in Britain, Mr. Carney and his fellow policy makers seem content to leave monetary conditions unchanged in the expectation that decent economic growth and increased wage pressures will be enough to keep deflation at bay.

Former Fed chief Ben Bernanke earned the sobriquet "Helicopter Ben" in 2002 after offering a cure for deflation first proffered by Nobel economist Milton Friedman: Simply drop money from a helicopter.

So far, Mr. Carney shows no desire to rev up the chopper.