Context
With rising tensions between Russia and Ukraine, disrupting supply chain, and increasing inflation, there are increasingly warning about stagflation in India.
Analysis
What is Stagflation?
Worst of both worlds The term appeared as early as 1965, when British Conservative Party politician Iain Macleod in a speech to the House of Commons said: "We now have the worst of both worlds — not just inflation on the one side or stagnation on the other, but both of them together. We have a sort of 'stagflation' situation and history in modern terms is indeed being made." |
How can stagflation be compared to inflation?
Stagflation and inflation are related, but they shouldn't be confused.
Inflation
Stagflation
What are the factors responsible for Stagflation?
Supply Shock
Poor fiscal and monetary decisions
What are the consequences of stagflation?
The trifecta of slow growth, high unemployment, and fast inflation can result into the following:
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