Has the threat of deflation passed already?

Signs that price pressures have picked up a bit during the past month or two have prompted some to suggest that the threat of deflation has vanished almost as suddenly as it appeared. We disagree. In the US and UK, headline inflation was always likely to rise towards central bank targets next year. But the threat of a prolonged period of exceptionally low inflation or outright deflation in much of Europe and in Japan remains very real.