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

Provinces peppering the public with cash to deal with soaring prices compounds inflation rather than easing it, economists say.

Provinces peppering the public with cash to deal with soaring prices compounds inflation rather than easing it, economists say.

They say the tactic used by Alberta this week and B.C. and Quebec earlier this year fails to quell inflation because having extra money means people will continue spending and demand for products and service will stay high, keeping decades-high inflation from budging.

If people had less money to spend while prices were high it would weigh on inflation, they say.

Inflation sat at 6.9 per cent last month down from 8.1 per cent in June.

Giving money to households is "likely to contribute to the problem as opposed to solving it," said Travis Shaw, senior vice-president of public finance at DBRS Morningstar.

"It does contradict what the Bank of Canada is trying to do with monetary policy in terms of trying to take some heat out of the system and ultimately bring down inflation," he said.

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.