Stagflation Explained: What It Means for Your Money

Stagflation is when inflation stays high while the economy stagnates and unemployment rises - the worst of both worlds.

It last hit hard in the 1970s, driven by oil shocks and loose monetary policy. Today, trade wars and conflict in the Middle East create similar conditions.

Central banks struggle with stagflation because raising rates fights inflation but deepens the recession, and cutting rates fights recession but fuels inflation.

The best defence is a diversified portfolio, low personal debt, and a spending buffer that lets you ride out a period where prices rise and pay does not.