Unexpected inflation linked to higher price variability, impacting consumer purchasing power.
The article looks at how grouping different products together affects the relationship between inflation and price changes. They used data from the US between 1948 and 1989 to see how inflation, both expected and unexpected, relates to price variability. They found that unexpected inflation is strongly linked to changes in prices, more so than expected inflation. The level of detail in grouping products didn't change the overall results, showing that inflation impacts prices in a similar way regardless of how products are grouped together.