Rising trend inflation leads to decreased welfare and economic instability.
The article looks at how changes in trend inflation affect people's well-being in an economic model. When trend inflation goes up or down, people's spending and free time don't react the same way. More uncertainty in trend inflation leads to lower average levels of spending and leisure time, making people worse off. The impact of shifting trend inflation on welfare is mostly due to reduced average levels of consumption and leisure, not increased variability.