An increase in the inflation rate permanently reduces the natural rate of unemployment.

Inflation Rate

The percentage increase in the general level of prices for goods and services in an economy over a period of time, often measured annually.

Natural Rate

Often referred to as the natural rate of unemployment, it is the level of unemployment consistent with a stable rate of inflation.

Unemployment

Unemployment is the state of being without a job despite actively looking for work, reflecting the portion of the labor force unable to find gainful employment.