What is Stagflation ?

  • Stagflation refers to economic condition where economic growth is very slow or stagnant and prices are rising.  
  • The term stagflation was coined by British politician Iain Macleod, who used the phrase in his speech to parliament in 1965.
  • The side effects of stagflation are increase in  unemployment- accompanied by a rise in prices, or inflation. Stagflation occurs when the economy isn't growing but prices are going up. 
  • At international level, this happened during mid 1970s, when world oil prices rose dramatically, fueling sharp inflation in developed countries.