Once stagflation occurs it is difficult to deal with. the measures a gvernment usually takes to revive an economy in recession (like cuting interst rates or increasing government spending) also increases inflation. Under normal recessionary conditions, inflationary policies, but here, given the already high inflation, pushing inflation still higher could mean price sprces spiralling out of control, thus further gitting productivity and growth.
What Causes Stagflation?
The major reasons for stagflation, whenever it has occurred in history, have been supply shocks or shortages due to unforeseen reason which pish up prices of essential commodities, causing an inflationary situation and atthe same time pushing up production costs, as it happened in 1970s in the US. The other reason is failure of the monetary authority to control excessive growth of money supply in the economy and excessive regulation of goods and labour markets by the government . for example, in the 1970s, a similar situation occurred during the global stagflation, where it began with a hugh rise in oil prices, but then continued as central vanks used stimulative monetary policy to counteract the resulting recession, casusing a runway wage-price spiral.