Economics expert says feds plan announcement won’t help inflation

The federal government has unveiled an $8.9 billion ‘affordability plan’ to help Canadians deal with inflation, but a University of Regina economist fears the government is not tackling the problem and make it worse.

“The system is overheated,” said Jason Childs, associate professor of economics at the University of Regina.

“We’re pouring more money into the system, so that’s going to increase inflation. This will mean that interest rates controlled by the Bank of Canada will have to rise even more than they otherwise would.

Deputy Prime Minister and Minister of Finance Chrystia Freeland announced the $8.9 billion plan earlier this month in her first major speech since the release of the federal budget.

“We know Canadians are worried about inflation and are asking what their government is going to do about it,” Freeland said.

The federal government’s “affordability plan” is providing $8.9 billion in new support that will “put more money in the pockets of Canadians when they need it most,” she said.

Still, if Childs thinks it might overheat the system, what should be the solution?

According to Childs, the solution lies with the federal government and the Bank of Canada in what he calls fiscal restraint. For Childs, actions speak much louder than words.

“We need the government to cut spending and really take this kind of fiscal restraint seriously,” Childs said.

“He stopped getting the Bank of Canada to buy his bonds. This is good news that will slow things down. But we are far from where we need to be to stabilize inflation.

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Breakdown of the latest inflation data in Canada

According to Childs, Saskatchewan is doing better than most Canadian provinces in terms of inflation.

Overall, the need for inflation mitigation in Saskatchewan is lower than elsewhere. But the reality is there’s no relief in view of inflation, Childs said, and those already struggling to make ends meet will continue to be hit the hardest.