Stagflation

A combination of inflation and sluggish, near-zero growth. National growth as measured by domestic output may show little gain from year to year (for example, less than 1%) yet wages and other costs may keep rising. This generates an inflation several multiples higher than the stagnant rate of growth, and leads to economic crises.

Stagflation was one of the after-effects of the 1970s oil-price shock. The failure of many industrial countries to respond firmly and quickly to the inflationary impact of the quadrupling of the oil price over a few months saddled many countries with an inflationary legacy which took many years to overcome.