What Is Stagflation?

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Economic 'stagflation is a term originally coined in the United Kingdom by politician Iain Macleod, while he was speaking in the House of Commons in the 1960s. It was used to describe a situation with inflation on one side and stagnation on the other side.

There are many factors that can cause stagflation from poor economic policies to sudden crises in critical sectors of the economy as has happened with energy prices.

But generally, stagflation is often characterized by slow economic growth accompanied by high unemployment and inflation.

The consensus of most economists is that increase in productivity and growth with inflation kept in check will prevent stagflation, however, increasing the money supply and raising taxes are both primary risks for creating conditions for stagflation.

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