What is stagflation?
Stagflation is when an economy suffers high inflation and weak or falling growth at the same time, often with rising unemployment. It is hard to fix, because raising interest rates to curb inflation can deepen the slowdown. The UK experienced severe stagflation in the 1970s after big oil price shocks.
The word combines stagnation and inflation. Normally inflation rises when the economy is booming and falls when it slows. Stagflation breaks that pattern. It usually starts with a supply shock, such as a jump in energy prices. This pushes up costs for everyone while also squeezing spending and output. Higher costs feed into prices, while weaker demand hits jobs and output.
In the 1970s, oil prices quadrupled after 1973. UK inflation rose above 20% in the mid-1970s while unemployment climbed. The experience shattered faith in the idea that governments could simply trade off a little more inflation for lower unemployment. It helped bring monetarism and independent central banks into fashion. Governments tried wage and price controls in the 1970s, with limited success.
Fears of stagflation return whenever energy prices spike. After 2021 UK inflation reached 11.1% in October 2022 while growth was weak. In August 2026 CPI inflation was 3.1%, above the 2% target, and the Bank of England held Bank Rate at 3.75% in September. Policymakers have to judge whether to fight inflation or support growth, and the choice is rarely easy.
Where you've seen it
The UK and the US in the late 1970s and early 1980s, when governments and central banks tried to control money growth to bring down inflation.
In the UK today
Strict money supply targets were dropped long ago, but the idea that controlling inflation is central lives on in the Bank of England's independence and its 2% inflation target.
The left often argues stagflation should be met with targeted support, windfall taxes and price controls rather than sharp rate rises that cost jobs.
The right often argues the priority is beating inflation, with tight money, lower spending and supply-side reforms to boost growth.
Britain is split. Now you decide.
In Population Decides world events like energy shocks can hit your economy, and you must choose between fighting inflation and protecting growth.
Play Population Decides freeCommon questions
What causes stagflation?
Usually a supply shock, such as a sharp rise in energy prices, combined with weak demand.
Is the UK in stagflation?
Economists disagree on the label, but inflation was above target at 3.1% in August 2026 while growth was weak.
How do you fix stagflation?
There is no easy fix, but options include higher interest rates, supply-side reforms and energy support.
Which economist is linked to monetarism?
Milton Friedman. Monetarism is linked to the economist Milton Friedman.
According to monetarists, what mainly causes inflation?
Too much growth in the money supply. Monetarists argue inflation is caused mainly by too much growth in the money supply.