What is stagflation? When prices rise and the economy stalls
By SendPay Business · · 2 min read
Stagflation is when prices keep rising fast while the economy barely grows and unemployment climbs. The name blends stagnation and inflation.
The 1970s example
The best-known case followed the 1973 oil crisis, when oil prices jumped sharply. The UK, US and other countries saw high inflation, weak growth and rising unemployment at the same time, which many economists had thought unlikely.
Why it is hard to fix
- Raising interest rates can slow inflation but also weakens growth further.
- Cutting rates can support growth but risks pushing prices higher.
- Central banks have to choose which problem to tackle first.
What it means for businesses and currencies
Costs rise while customers spend less, which squeezes margins. Currencies can swing depending on how the central bank responds: firm rate rises can support a currency, while signs of hesitation can weaken it.
Where SendPay fits
SendPay platforms let customers hold GBP, EUR and USD and exchange between them at a fee the platform owner sets, powered by licensed partners. SendPay doesn't offer trading.
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Interest rates and currencies →Read next
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.