1891, "release of air," noun of action from deflate (q.v.). In reference to currency or economic situations, from 1916. Related: Deflationary.
1965, apparently coined by U.K. politician Iain Macleod (1913-1970), from stag(nation) + (in)flation.
Attacking the Government's economic policy last night in the House of Commons, Mr. Iain Macleod (West Enfield - Con.) the Opposition spokesman on Treasury and economic affairs, described the present situation in Britain as "stagflation" — stagnation and inflation together. [Glasgow Herald, Nov. 18, 1965]