Stagflation Vs Inflation

What is Stagflation?

What is Inflation?

What Are the Differences Between Stagflation and Inflation?

Following are the differences between stagflation and inflation:




Potential Causes

Inflation is an outcome due to a rise in combined demand, production costs, and supply decline.

Among the common causes, one is supply shockwaves in commodities, such as petroleum, which is likely to shake up the whole economy.


Inflation is common and can be a sign of a healthy economy.

Stagflation is a rare occurrence. The last stagflation was experienced in the 1970s.


Inflation is basically measured on a yearly basis, so the inflation rate is more likely to vary. This is because the same inflation rate cannot last for very long.

Stagflation is mostly long-term. For example, the stagflation experienced in the US in the 1970s continued until the beginning of 1980s.

Effect on GDP

Inflation can lead to a short-term rise in GDP since most consumers spend more as they become worried, considering the price will continue to rise in the upcoming days.

Often GDP growth remains negative or low during the phase of stagflation.


As explained by the Phillips curve, generally, inflation and unemployment manifest an inverse relation.

A high rate of unemployment, with high inflation, is common during stagflation.


The phase of high inflation can end if the supply of money and demand of consumers get reduced via fiscal policies such as improved interest rates, increased taxes, etc.

Making investments for economic growth may multiply inflation while increasing interest rates to lessen inflation and commonly lead to slower growth of the economy.

What Causes Inflation?

What Causes Stagflation?

FAQs About Stagflation vs Inflation

Is it beneficial to invest during a stagflation?

In general, stagflation is not beneficial for individuals since you will be generating less money and prices of everything will be more. For prospective investors, stagflation signifies lower returns as the rate of growth drops.

What are the common characteristics of stagflation?


Certain typical features of stagflation are:

  • High rate of inflation
  • Sluggish economic growth or stagnation
  • High rate of unemployment
  • Poor economic phase

What are the investment options for stagflation?

The investment options for stagflation include investing in real estate, gold and silver, commodities, stocks, cryptocurrency and so on.

Which Indian state records highest inflation?

According to the Consumer Price Index (CPI), Andhra Pradesh has recorded the highest level of inflation rate of 8.06%.