Stagflation is an economic phenomenon  combines high inflation, stagnant economic growth, and elevated unemployment.

• The term was first used in the 1960s and became prominent during the 1970s oil crisis.

Causes

• Supply shocks like rising crude oil price (Eg : Iran Conflict).
• Spike input costs (e.g., energy),
• Slowing production while raising prices.
• Cost-push factors, such as wage-price spirals or poor policy (e.g., excessive money supply).

Impact

• Inflation erodes household incomes, reducing consumption.
• Companies facing higher costs and weaker demand cut jobs.
• Economic uncertainty discourages businesses from investing, further hampering growth.
• High interest rates, necessary to fight inflation, reduce the value of banks’ bond holdings.

Source: The Indian Express