Member-only story
What Is Stagflation ?
Stagflation is a unique phenomenon that occurs when an economy experiences both inflation and stagnation at the same time. It is a rare combination of rising prices and declining economic activity, which creates a difficult situation for policymakers and businesses alike.
In simple terms, inflation refers to the general increase in prices of goods and services over time, while stagnation refers to a lack of economic growth and increased unemployment. When both of these factors occur together, stagflation is said to be taking place.
One of the most notable examples of stagflation occurred in the 1970s, when a combination of rising oil prices, increased government spending, and monetary policy mistakes led to high inflation and low economic growth. This period is often referred to as the “Great Stagflation,” and it had a profound impact on economies around the world.
Another example of stagflation can be seen in the current economic situation in Venezuela. Despite having some of the largest oil reserves in the world, the country is experiencing high levels of inflation and economic stagnation due to a combination of political and economic factors. The inflation rate has been in the thousands of percent in recent years, while the economy has shrunk by over half since 2013.
