Stagflation

A stalled economy with prices still rising

In detail

Stagflation is a stalled economy and rising prices at the same time. Normally a weak economy cools prices, but when the cause sits on the supply side, such as an oil shock, both arrive together. It leaves the central bank boxed in: raising rates chills the economy further, cutting them feeds the price rises.

Example

Growth stuck below 1% while prices climb 5% is the classic shape.

Related terms

Inflation Recession Central bank

Read in the app (App Store)

For learning, not investment advice. Decisions are your own.