![\"\"](\"https:\/\/www.politicsphere.com\/wp-content\/uploads\/2022\/07\/concept-time-running-out-on-saving-for-retirement-sand-in-an-hourglass-showing-the-passage-of-time_t20_AVBGWW-1024x683.jpg\")
<\/figure>\n\n\n\nCauses of Cost-Push Inflation<\/h3>\n\n\n\nIncreased labor Costs<\/em><\/h4>\n\n\n\nBusinesses are one of the critical factors in creating cost-push Inflation. When labor charges increase, companies lose more profit to wages. To compensate for the increases, employers push the burden on consumers. The escalation of wage costs can occur due to mandatory wage increases introduced by the Government. Raising the minimum wage per worker is typical in periods of low economic performance. During inflationary periods<\/a> workers have their disposable income eroded. In some industries, workers will likely strike due to the unsustainability of their employment. Incapacitation can occur in the event of stalled contract negotiations with company management. When employees go on strike, there is likely to be a decline in production. If the strikes are nationwide, there will be less national production and, as a result, higher prices.<\/p>\n\n\n\nNatural Disasters<\/em><\/h4>\n\n\n\nNatural disasters such as floods, earthquakes, or fires can shut down vital sectors of the economy. Unexpected damage to a production facility will prohibit production fully or partially. This shutdown of the production chain will leave businesses with no choice but to increase prices. Recapitalization is a financially significant expense to cover. Companies will have to raise sales prices to recoup the costs of a disaster and mediate the forthcoming financial difficulties, which can cause cost-push Inflation.<\/p>\n\n\n\n
Change of Government<\/em><\/h4>\n\n\n\nThe leadership available in a country is required to provide businesses with a conducive business environment. A sudden change in Government may lead to a loss of faith in the country\u2019s investment viability. Investors may choose to liquidate<\/a> some of their investments out of fear they won\u2019t be able to maintain their previous production levels. This problem is mainly found in developing nations with high levels of political instability. A change of Government can also lead to new regulations and changes in current laws. These new policies may cause costs to rise for companies. An example of a costly new approach is the introduction of employee healthcare.<\/p>\n\n\n\n![\"\"](\"https:\/\/www.politicsphere.com\/wp-content\/uploads\/2022\/07\/one-hundred-dollar-bill-between-large-chain-links-rltheis_t20_P1rAz7.jpg\")
<\/figure>\n\n\n\nWhat Is Stagflation?<\/h2>\n\n\n\n
High Inflation, high unemployment, and small-no economic growth. An economy is deemed to be experiencing Stagflation when these adverse conditions occur. These conditions often choke consumers’ disposable income when high inflation rates cause rising prices. Successive quarters of declining Gross Domestic Product (GDP) plus high inflation levels lead to economic Stagflation.<\/p>\n\n\n\n
Economists began using this word in the 1960s. It originally meant a time of poor economic performance. The term was then popularized during the recessionary period in the U.S., which started in the 1970s and lasted until the mid-1980s. During this period, the U.S. suffered five quarters of negative GDP growth. The stagnating economy meant that disposable income was being eaten away by Inflation. The period saw Inflation doubling continuously until it reached double digits in 1974. This problem, combined with rising unemployment rates of close to 9%, meant that the U.S. faced Stagflation. This phenomenon leads to the creation of the Misery Index. This measure was introduced to help define the simple sum of Inflation and unemployment rates. The higher the Misery Index, the more likely consumers were to feel the effects of Stagflation on the economy.<\/p>\n\n\n\n
Causes of Stagflation<\/h3>\n\n\n\nEconomic Supply Shocks<\/em><\/h4>\n\n\n\n
Businesses are one of the critical factors in creating cost-push Inflation. When labor charges increase, companies lose more profit to wages. To compensate for the increases, employers push the burden on consumers. The escalation of wage costs can occur due to mandatory wage increases introduced by the Government. Raising the minimum wage per worker is typical in periods of low economic performance. During inflationary periods<\/a> workers have their disposable income eroded. In some industries, workers will likely strike due to the unsustainability of their employment. Incapacitation can occur in the event of stalled contract negotiations with company management. When employees go on strike, there is likely to be a decline in production. If the strikes are nationwide, there will be less national production and, as a result, higher prices.<\/p>\n\n\n\n Natural disasters such as floods, earthquakes, or fires can shut down vital sectors of the economy. Unexpected damage to a production facility will prohibit production fully or partially. This shutdown of the production chain will leave businesses with no choice but to increase prices. Recapitalization is a financially significant expense to cover. Companies will have to raise sales prices to recoup the costs of a disaster and mediate the forthcoming financial difficulties, which can cause cost-push Inflation.<\/p>\n\n\n\n The leadership available in a country is required to provide businesses with a conducive business environment. A sudden change in Government may lead to a loss of faith in the country\u2019s investment viability. Investors may choose to liquidate<\/a> some of their investments out of fear they won\u2019t be able to maintain their previous production levels. This problem is mainly found in developing nations with high levels of political instability. A change of Government can also lead to new regulations and changes in current laws. These new policies may cause costs to rise for companies. An example of a costly new approach is the introduction of employee healthcare.<\/p>\n\n\n\n High Inflation, high unemployment, and small-no economic growth. An economy is deemed to be experiencing Stagflation when these adverse conditions occur. These conditions often choke consumers’ disposable income when high inflation rates cause rising prices. Successive quarters of declining Gross Domestic Product (GDP) plus high inflation levels lead to economic Stagflation.<\/p>\n\n\n\n Economists began using this word in the 1960s. It originally meant a time of poor economic performance. The term was then popularized during the recessionary period in the U.S., which started in the 1970s and lasted until the mid-1980s. During this period, the U.S. suffered five quarters of negative GDP growth. The stagnating economy meant that disposable income was being eaten away by Inflation. The period saw Inflation doubling continuously until it reached double digits in 1974. This problem, combined with rising unemployment rates of close to 9%, meant that the U.S. faced Stagflation. This phenomenon leads to the creation of the Misery Index. This measure was introduced to help define the simple sum of Inflation and unemployment rates. The higher the Misery Index, the more likely consumers were to feel the effects of Stagflation on the economy.<\/p>\n\n\n\nNatural Disasters<\/em><\/h4>\n\n\n\n
Change of Government<\/em><\/h4>\n\n\n\n
<\/figure>\n\n\n\nWhat Is Stagflation?<\/h2>\n\n\n\n
Causes of Stagflation<\/h3>\n\n\n\n
Economic Supply Shocks<\/em><\/h4>\n\n\n\n