What is the concept of stagflation?

Stagflation is an economic condition characterized by a combination of stagnation (slow or no economic growth), high unemployment, and high inflation. It is a challenging situation for policymakers because the usual tools for combating inflation—such as raising interest rates—can exacerbate unemployment, while policies aimed at reducing unemployment—such as lowering interest rates—can fuel inflation. Stagflation can occur when an economy is hit by supply shocks, such as a sudden increase in oil prices or other production costs, which drive up prices even while economic growth slows. The term gained prominence during the 1970s oil crises when many advanced economies experienced stagflation.