On inflation, the ‘end in sight will come,’ economist says

Although there are no immediate solutions to inflation, Moshe Lander, Concordia University economist, assures that the “end in sight” is within reach.

“The best thing we can do at the moment, as much it’s terrible, terrible for to hear,” he said to CTV’s Your Morning on Wednesday.

“If we can get past COVID, then we can get through a year of rough inflation.”

Statistics Canada reported a 7.7 percentage increase in the annual inflation rate to May, which was almost four decades ago.

The price of energy rose by 34.8 percent compared to the previous year, while gasoline prices increased by 48 percent. The annual inflation rate for May was 6.3%, compared to 5.8% in April.

In an effort to curb inflation, the Bank of Canada has increased its key interest rate target by three times this year.

GOVERNMENT SPENDING

This news comes amid a report by Scotiabank on Sunday urging for lower government spending to reduce inflation.

The report stated that “It is fair for us to say that Canadian fiscal policy authorities are doing little to slow inflation right now.” said.

Lander saidWhile cutting government spending is the right policy, it would amount to “political suicidal”

He said, “People won’t believe it to be the right solution.” said. “I think people want governments to put money in their pocket to help with rising gasoline costs, rising rents and housing cost. The idea of taking the opposite policy would be politically unpopular, even though it’s the right one.”

Economists and others argued for a temporary reprieve in the collection gas taxes because of rising gas prices. Some Canadian provinces and American States have already adopted this move.

Lander claims that “that’s really not going be affecting inflation all that much.”

“It’s a nice visual to Canadian consumers, but it’s not going much. The problem with it is that the government’s environment policy kind of contradicts it. I don’t think that this is the right solution to the inflation problem.

CTVNews.ca was told by a senior Macdonald-Laurier Institute fellow in March that, while it was a positive political decision, a temporary halt to gas taxes would encourage consumption. It would also lead to demand destruction, where the price of a product is so high that it literally kills the demand.

With files from CTV News & The Canadian Press