Should we be worried about inflation?

One part of this question is about the chances that inflation will increase.  The other part is how bad it would be if inflation increased.   There's been a lot of discussion of the first part, but not much of the second--people just seem to take it as obvious that inflation is bad.   Of course, hyperinflation can bring the economy to a standstill, but would inflation of 5% or even 10% be a serious problem? Presumably the idea is that higher inflation leads to lower economic growth, so I looked for research on that issue.  The most widely cited paper seems to be one by Robert Barro in 1995.  He found that higher inflation indeed went with lower growth.  Moreover, the relationship appeared linear--every increase in inflation would reduce the expected growth rate by about .02 percentage points.  (For example, a country that was predicted to grow by 2.1% if it had stable prices would be predicted to grow by 2% if it has 5% inflation, 1.9% if it had 10% inflation, etc.).  That is, there was no "safe" level of inflation.  But another widely cited paper published at about the same time, by Michael Sarel, came to very different conclusions: inflation didn't have any negative effects on growth until it got beyond 8%.

Oddly, there didn't seem to be much later research trying to see who was right, so I took a look myself.  Data on real GDP per capita going back to 1950 can be found in the Penn World Tables.   I got data on inflation from the Bureau of Labor Statistics.  The BLS data includes only 16 countries, but they are all industrialized economies and reasonably stable democracies, so you don't have the questions of comparability and data quality that you have when using large numbers of nations.

Inflation                          Mean growth     Median growth
negative (deflation)               1.6%                 2.6%
0-2%                                   2.3%                 2.4%

2-4%                                   2.6%                 2.6%
4-7%                                   2.5%                 2.5%
7-10%                                 2.9%                 2.7%
over 10%                             1.1%                 1.1%

So inflation appears to have no association with growth until you reach about 10%, a level that the United States hasn't reached since 1981 (we haven't even passed 5% since 1991).  That suggests that we have a lot of safety room.  The relationship continues to hold if you use an average of the last three years of inflation and if you add controls for country-level fixed effects.  This obviously isn't a definitive analysis, but it's more than I've seen in any of the warnings about the dangers of inflation.