Stagflation means that the price level continues to rise in the case of economic stagnation. This is usually caused by excessive demand, excessive money supply and policy mistakes. In the case of stagflation, the economy may seem to be growing, but in fact the growth rate is very low. This is because although prices are rising, real wages (that is, monetary wages including inflation) are falling, which makes people feel that purchasing power is declining.

In addition, due to rising prices, enterprises and governments have to produce and operate at higher costs, which may lead to reduced investment and increased unemployment. The sudden decrease in the supply of some goods or services has led to an increase in prices. For example, the oil crisis is a typical example. The decrease in oil supply leads to an increase in oil prices, which in turn leads to inflation.

The influence of stagflation on economy;

1, economic growth slowdown: stagflation will lead to economic growth slowdown, because rising prices will reduce the actual purchasing power of consumers, reduce the investment and production of enterprises, and thus reduce the overall level of economic activities.

2. Rising unemployment rate: As economic growth slows down, enterprise production decreases, and stagflation will lead to rising unemployment rate. The rising unemployment rate will further reduce consumer spending and business investment and aggravate the economic slowdown.

3. Increased inflationary pressure: The essence of stagflation is the combination of inflation and economic stagnation. Rising prices will lead to increased inflationary pressure. If the inflation rate is higher than people's expectations, it may lead to a decline in the value of money, which will have a negative impact on savings and investment.