Stagflation is a unique economic condition characterized by the coexistence of three troubling factors: stagnant economic growth, high inflation, and high unemployment. It differs from other economic phenomena like inflation or recession in its simultaneous occurrence of issues that are typically opposing.

Inflation refers to a sustained rise in the general price of goods and services, often occurring in a growing economy with low unemployment. It is usually manageable through monetary policies like raising interest rates to cool demand. However, in stagflation, inflation persists even when economic growth is stagnant or contracting, making standard anti-inflationary measures less effective.

Recession involves a significant decline in economic activity over a period, typically marked by falling GDP, rising unemployment, and lower inflation or deflation. Unlike stagflation, recessions generally involve suppressed demand, not rising prices.

The distinctiveness of stagflation lies in its contradictory nature: high unemployment (indicating low demand) occurs alongside high inflation (usually driven by excessive demand or supply shocks). This creates a policy dilemma, as measures to combat inflation (e.g., raising interest rates) can worsen unemployment, and efforts to boost employment (e.g., lowering rates) may exacerbate inflation.

Thus, stagflation presents a more complex challenge for policymakers than inflation or recession alone.