Episode 87: Could AI Actually Lower the Cost of Living?

Published October 19, 2026.

We hear plenty about how artificial intelligence could change the way Canadians work. But could AI also change how much we pay for everyday goods and services?

Artificial intelligence is often discussed in terms of jobs, automation and technological disruption. But one of its potentially significant economic effects could be something less obvious: productivity.

In this episode of Finance Forward, part of the Money Monday series, Darren Devine, Financial Planner with Sun Life and President of Devine & Associates, examines whether AI could eventually help reduce the cost of living in Canada.

When businesses become more productive, they may be able to produce more goods and services using the same resources. Over time, those efficiencies could help reduce operating costs, increase supply and ease some of the pressure that contributes to inflation.

But there is an important distinction between lower prices and slower price increases.

AI may not cause the cost of groceries, transportation or everyday services to suddenly fall. Instead, productivity improvements could help certain prices rise more slowly than they otherwise would have.

Drawing on research and commentary from the Bank of Canada, this episode explores:

  • AI and productivity: How artificial intelligence could help Canadian businesses produce goods and services more efficiently.
  • Inflation and consumer prices: Why increased productivity could ease inflationary pressure without necessarily causing prices to fall.
  • The cost of AI infrastructure: How investments in data centers, computer chips, electricity and equipment can also increase demand and costs.
  • Business adoption in Canada: Why meaningful productivity gains may take time as businesses learn to integrate AI into their operations.
  • Economic growth and wages: How improved productivity could eventually support higher wages and living standards.
  • Retirement purchasing power: Why long-term inflation matters for Canadians relying on retirement savings, pensions and other income sources.

For retirees and those approaching retirement, purchasing power is an important part of financial planning.

Even modest differences in inflation can affect how far retirement income stretches over 20 or 30 years.

That's why the potential economic impact of AI is worth watching.

However, there are still significant uncertainties. The speed of adoption, size of future productivity gains and distribution of benefits remain difficult to predict.

AI is not a guaranteed solution to rising living costs.

But if it helps Canadian businesses operate more efficiently, it could become one of several forces influencing inflation, economic growth and future living standards.

Understanding those possibilities is part of understanding the changing economy—and what it could mean for your financial future.

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Could AI Actually Lower the Cost of Living?

Presented by Darren Devine, CFP®, CLU®, Financial Planner, Sun Life and President of Devine and Associates Financial Services Inc.

We usually hear about AI taking jobs.

But could artificial intelligence eventually make some things cheaper?

It sounds strange, but one of AI's biggest potential economic effects may have less to do with robots replacing people — and more to do with productivity.

Today’s episode is part of our ‘Finance Forward’ series, helping you navigate the AI economy. I’m Darren Devine, Financial Planner with Sun Life and President of Devine & Associates. For over 20 years, I’ve been helping families across Ontario plan with confidence, protect what matters most and stay grounded through economic shifts.

If you've been grocery shopping, filled up your car or paid your monthly bills lately, you don't need me to tell you that the cost of living matters.

For retirees, it matters even more.

When you're relying on retirement income, every dollar that prices rise affects what that income can actually buy.

And that's where AI gets interesting.

The Bank of Canada says that if artificial intelligence increases productivity, businesses could eventually produce more goods and services with the same amount of work.

That increased supply could help keep prices lower than they otherwise would have been.

And when labor productivity increases, the economy can potentially grow faster without creating the same amount of inflationary pressure.

Now, there's an important distinction here.

That doesn't necessarily mean the prices you see today suddenly start falling.

It could mean that over time, some prices rise more slowly than they otherwise would have.

Businesses are already looking at AI as one way to improve service, reduce costs and increase productivity.

But according to Bank of Canada Governor Tiff Macklem, most Canadian businesses are still in the early stages of experimenting with AI.

The larger productivity gains could take time as companies learn how to integrate the technology and redesign the way they operate.

And there's another side to the story.

AI itself isn't free.

The enormous investment in data centers, computer chips, electricity and other infrastructure needed to support AI can create demand — and sometimes push costs higher.

We've actually seen an example of that already.

In its July 2026 Monetary Policy Report, the Bank of Canada noted that prices for computer equipment were being pushed higher partly by strong global demand associated with the AI boom.

So AI isn't automatically going to make everything cheaper.

Some costs could rise while the technology is being built out.

Others could eventually fall — or increase more slowly — if businesses become more efficient.

And that's why productivity matters so much for Canadians planning for retirement.

Inflation affects your purchasing power.

If your retirement income grows more slowly than the cost of the things you buy, that income doesn't stretch as far.

But if productivity allows businesses to produce more efficiently, it can help reduce inflationary pressure over the long term.

It may also help support higher wages and improved living standards.

The Bank of Canada has specifically identified higher wages, cost savings for consumers and less pressure on inflation as potential benefits if AI ultimately produces meaningful productivity improvements.

But there's still a lot we don't know.

We don't know how quickly Canadian businesses will adopt AI.

We don't know how large the productivity gains will ultimately be.

And we don't know exactly who will benefit from them most.

Bottom line?

AI probably isn't going to suddenly make your grocery bill cheaper tomorrow.

But if it helps Canadian businesses become more productive over time, it could help the economy grow with less inflationary pressure.

And for anyone living on retirement income, even small changes in inflation can make a meaningful difference over many years.

That's why the AI story isn't only about technology.

It's also about the future purchasing power of your money.

Thanks for tuning in to Finance Forward, right here on Money Monday.

Don't forget to like and comment for more episodes filled with tips to help make your financial journey a breeze.

Until next time, I'm Darren Devine, and you can always talk to us today at DevineAndAssociates.ca.

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