Economists say provinces peppering the public with cash to deal with soaring prices compounds inflation rather than easing it.
Travis Shaw says the move fails to quell inflation because having extra money means people can keep spending and demand for products and service will stay high, keeping decades-high inflation from budging.
The senior vice-president of public finance at DBRS Morningstar says if people had less money to spend while prices were high it would weigh on inflation and contribute to the Bank of Canada’s goal of taking some heat out of the financial system.
His remarks come a day after Alberta Premier Danielle Smith announced her Inflation Relief Act, which will dole out $600 over six months to families earning less than $180,000 for each child under the age of 18 or senior.
Smith will also index income supports to inflation and provide an additional $200 in consumer electricity bill rebates through the winter months.
Quebec previously announced it will give people who earn less than $104,000 a few hundred dollars, while B.C. increased tax credits and family benefits and capped rent hikes at two per cent.
This report by The Canadian Press was first published Nov. 23, 2022.
The Canadian Press