The article explores how trend inflation and the real-activity gap affect inflation in G7 countries since 1960. By analyzing inflation and unemployment data, the researchers found that both trend inflation and the inflation gap play a significant role in inflation variation over the past 50 years. The real-activity gap, measured by the difference between actual and natural unemployment rates, explains a large part of the inflation gap for each country. This suggests that the New Keynesian Phillips Curve, with trend inflation included, is a relevant model for understanding inflation in G7 countries. The study also provides new estimates of trend inflation for these countries, incorporating information from the real-activity gap.