The robots in the 1980s hit movie The Terminator aimed to destroy humanity, but the rise of the real robots in 21st century is destroying something else: High inflation.

The most obvious evidence is in retail where millions of Americans now shop online for the best prices. Changing shopping habits have turned Amazon AMZN, +5.69% into one of the world’s most valuable companies — and kept retailers from jacking up prices.

The technology revolution is nothing new, of course, but another wave of innovation and adoption may now be upon us. Companies are investing more in “smart” robots and the like to handle routine and repetitive tasks, enabling them to cut costs and even cut prices.

“You get the sense we are seeing increased use of new automation that has even greater potential to reduce costs than in the past,” said Sal Guatieri, senior economist and director of research of BMO Capital Markets in Toronto.

In an article called “2021: A Price Oddity,” Guatieri contends the latest advances in automation are largely responsible for the surprisingly tepid U.S. inflation despite rising wages and the lowest rate of layoffs and unemployment since the 1960s.

Inflation has run at a 2% rate or less since 2009 using the Federal Reserve’s preferred core PCE price gauge that strips out volatile food and energy costs.

Low inflation has also kept the Fed from raising the cost of borrowing as aggressively as it might have done so in the past. In turn, those low rates have been a boon to the U.S. stock market, with the S&P 500 SPX, +1.05% up 300% from the 2009 bear market low.

Last month the Fed put further rate hikes on hiatus.

“When even the Fed chair questions the need to lift interest rates further, despite the lowest jobless rate in nearly half a century, you know something odd is happening with inflation,” Guatieri wrote.

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Robots on the rise

Although other economists agree automation has a dampening effect on inflation, Guatieri believes the impact runs deeper. He began to suspect something was up over the past few years when inflation remained low in the face of the usual telltale signs of rising prices.

The use of artificial intelligence, however, is still in the fairly early stages and hasn’t spread to most of the economy as it eventually will. Guatieri suspect the deflationary effect of robotics are only going to become more pronounced.

“The use of automation, robots in particular, is still relatively limited compared to the number of people employed,” he told MarketWatch in an interview.

Consider: Sales of industrial robots worldwide rose 30% in 2017 to 381,000 units, but there was still fewer than one robot per 100 human workers.

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That number is expected to go up — way up. The world leader in robotics, South Korea, already had seven robots per 100 workers, according to an 2017 industry estimate.

“ “It’s getting to the point now that some studies suggest automation will replace almost half of all tasks that workers now do.” ” — —Sal Guatieri, BMO Capital Markets

“It’s getting to the point now that some studies suggest automation will replace almost half of all tasks that workers now do,” Guatieri said.

The adoption of smart robots is relentlessly driving down labor costs. By reducing expenses, companies can maintain profits and even cut prices in a intensively competitive global economy.

Guatieri points to internet giant Amazon as a trendsetter. Using robots to pick and pack, the company requires just one minute (and falling) of human labor after a customer clicks to buy a product to get it onto a delivery truck.

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Grocery chains have also deployed automation in the past few years to cut costs and speed up delivery in a highly competitive industry with low profit margins. That’s a chief reason why grocery bills are basically flat since 2015.

A robotic arm lifts a pallet of goods inside an Amazon shipping center in Washington. The eighth generation center features the latest in Amazon.com's robotic technology. Getty Images

That’s just the tip of the iceberg, too.

Guatieri said robotics and smart automation are just beginning to make big inroads in education, health care, hotels, restaurants, construction and other people-intensive businesses.

Another huge source of future cost savings is in so-called last-mile delivery — getting the goods or services from the business to consumer. Drones, self-driving trucks and apps with high artificial intelligence will determine the best real-time route, then transport and deliver goods faster and cheaper than ever.

Good for workers?

Great for consumers with steady jobs, all right, but it can’t be good for most workers, can it?

Guatieri points out that demand for robots is on the rise in no small part because of tight labor markets and low unemployment in wealthy nations whose populations are either barely growing or shrinking. The problem right now is too few workers, not too many.

Yet he said many workers may be reluctant to ask for bigger raises or paychecks for fear their jobs could be, well, terminated by machines. That’s also having a restraining influence on inflation.

“Certainly those who perform repetitive or routine work are at risk of losing their jobs,” Guatieri said.

Does the effect of robots on prices mean low inflation is here to stay?

No. If unemployment falls below 3.5% or the U.S. economy sped up, Guatieri said, inflation could tilt higher and force the Fed to raise rates again.

“But when you don’t know what is happening with the inflation process, you need to be reactive instead of preemptive,” Guatieri said. Powell and Co. are doing precisely that.