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Category: Glint's Helpful HInts

Glint’s Helpful Hints: Stagflation

At Glint we like to stay abreast of what’s going on in the wider economy and often have quite in-depth conversations with the whole te...

22 July 2021

Gary Mead

At Glint we like to stay abreast of what’s going on in the wider economy and often have quite in-depth conversations with the whole team to ensure that we are all fully cognisant of current events in the money world. Recently, and perhaps inevitably, the words ‘inflation’, ‘deflation’ and ‘stagflation’ cropped up. Some colleagues were a little shaky about what these terms mean. We thought some of you too could do with a pithy summary, so here goes:

Inflation – is when prices as a whole go up. Wages might go up too, and that means we might all feel richer, but actually we won’t be if prices go up higher and/or faster than our earnings.

Deflation – opposite to inflation. So prices as a whole tend to be falling. Governments hate deflation more than inflation, because people put off spending in the expectation of further price falls; and the economy as a whole slows down.

Stagflation – a combination of a stagnant economy, which is not growing and may actually be shrinking, plus inflation. A truly disastrous situation, in which people see prices going up while their incomes and jobs are at greater risk, because the economy isn’t growing.

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