Generally speaking, it means that prices are rising, but the economy is stagnant. Is the result of the long-term development of inflation.
Stagflation, as a spelling word, comes from 1965 British politician Iain Macleod's speech in Parliament.
This concept is noteworthy in part because it is based on the post-war macroeconomic theory that inflation and economic recession cannot coexist, and also because it is generally believed that stagflation, like fiscal deficit, is difficult to cure once it starts.
In the political field, stagflation is measured by inflation pain index (simply the sum of unemployment rate and inflation rate), which is used to influence the US presidential elections of 1976 and 1980.
Economists put forward two main reasons for stagflation:
Negative supply shocks reduce economic productivity. For example, the oil crisis led to an increase in oil prices, an increase in production costs and a decrease in profits, which led to an increase in commodity prices and a slowdown in the economy.
Another reason is improper economic policies. For example, the central bank allows the money supply to grow excessively, and the government over-regulates the commodity market and the labor market.
When analyzing the stagflation in 1970' s, two explanations are provided: first, the oil price soared, and then the central bank used excessively stimulating monetary policy to fight against the economic recession, forming a price/wage spiral.