It's a misunderstanding that bitcoin has been created to facilitate pervasive low cost transactions. Transactions are important, and they occur, but they are not designed to support low level trade in the same way that you can't easily buy a tube of toothpaste with gold. Improvements to BTC may make that a reality, but today it is certainly not the case. Additionally, we are in the stop-gap phase where transactions are still intended to execute at a fiat level. If BTC is successful, then transactions will be priced in BTC independent of the fiat levels. The value of the dollar goes up and down all the time, but merchants generally aren't market pricing items to the second based on exchange rates, and most don't really care. The additional gain-able profit is pure speculation anyway.

What is more likely is that a layer of banking will be built on top of BTC where involving the blockchain in every transaction is unnecessary. You probably use real fiat once a week if that to buy some small items. Instead you trust some 3rd party update their ledger for everyone and give you the real fiat if you asked for it. Broad adoption of losable wallets on cellphones spells consumer-protection disaster.