thumb|1973 oil crisis caused an increase in the price of Brent Crude thumb|300px| Economists offer two principal explanations for why stagflation occurs. First, stagflation can result when the economy faces a supply shock, such as a rapid increase in the price of oil. An unfavourable situation like that tends to raise prices at the same time as it slows economic growth by making production more costly and less profitable.
thumb|1973 oil crisis caused an increase in the price of Brent Crude thumb|300px| Economists offer two principal explanations for why stagflation occurs First, stagflation can result when the economy faces a supply shock, such as a rapid increase in the price of oil An unfavourable situation like that tends to raise prices at the same time as it slows economic growth by making production more costly and less profitable.