Rises in crude oil prices, as well as the resultant outflows of income and decreases in production capacity, should be accepted as given conditions for Japan's economy. In other words, they cannot be avoided. However, economic and price developments differed markedly between the periods immediately after the two oil crises emerged.
During the first oil crisis, Japan's economy suffered from a combination of runaway inflation and economic stagnation – in other words, stagflation. Economic indicators show that the economy, which continued enjoying rapid annual growth of 8-9 percent until 1973, suddenly contracted by 1 percent in 1974 and CPI inflation peaked at an annual rate of 25 percent in 1974.