Alberta’s tactic of doling out cash fuels inflation rather than easing it: economists

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.

Click to play video: 'Key points in Premier Danielle Smith’s televised address'

Key points in Premier Danielle Smith’s televised address

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.

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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.

Read more: Alberta premier issues mandate letters to ministers stressing focus on inflation, ‘affordability crisis’

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.

Click to play video: '‘We’re not buying it’: Rachel Notley responds to Premier Smith’s televised address'

‘We’re not buying it’: Rachel Notley responds to Premier Smith’s televised address

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