Stagflation is an economic cycle characterized by slow growth and a high unemployment rate accompanied by inflation. It is a rare phenomenon that occurs when a supply shock occurs, such as a disruption in the oil supply or a shortage of essential parts. The term stagflation is a portmanteau that combines the words stagnation in GDP and inflation. Stagflation is a combination of three negatives: slower economic growth, rising prices, and rising unemployment. It is a toxic brew that could hamper countries recovery from the coronavirus pandemic. The effects of stagflation include lower returns for investors due to slow growth, and the longer stagflation continues, the more it impacts the future value of their investments. To avoid stagflation, governments adopt economic, monetary, and fiscal policies, but they don't always go hand in hand.