New Government Measures to Fight Inflation

Date Posted: April 6, 2022

Economist Rebekah Young from Scotiabank said the federal government will unveil measures to help Canadians with the rising cost of living in its budget this week.

Several provinces have already taken steps to ease the burden with Quebec planning to send a $500 cheque to taxpayers earning less than $100,000, Alberta pausing the collection of provincial fuel tax and Ontario planning to temporarily reduce the fuel and gas taxes it collects.

Young estimated that those provincial measures will likely equate to between $8 billion and $10 billion in support this year.

Though the help from the federal government would take some of the pressure off Canadians, it is known that more government spending is a fuel for inflation. This puts the government in a tricky position; however, it’s looking as if Canadian wages won’t be able to keep up with the rate of inflation.

Young predicts that the government will step in and increase its spending to help Canadians with cost of living and that it could amount to $56 billion in new spending by fiscal year 2026-2027. In addition, the agreement the Liberals struck with the New Democrats could add up to $20 billion in additional spending as well.

It’s apparent that there will be more spending from the government and there will be actions taken to help Canadians, however, the risk is that of adding to the rise of inflation.

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