If the general price level is estimated to be rising more rapidly than is in fact the case, then we are simultaneously understating growth in real output and productivity. Real incomes and living standards are rising faster than our published data suggest.
This weakening might be partly the result of a mismeasurement of slack (because of structural changes in the labour market) or an unstable relationship between slack and inflation over time. At the same time, this effect could also result from discrete parallel shifts in the Phillips curve.