What the rise in flash drives tells us about inflation (and AI)
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Flash drive prices have exploded, ending a decades-long deflation in the ubiquitous devices often referred to as thumb drives.
Why it matters: The spike shows how AI investment continues to seep into some of the more mundane corners of the economy.
Driving the news: Prices for "computer software and accessories" jumped a record 14.5% in May compared with the previous year, according to data released in Wednesday's Consumer Price Index report.
- It was the highest in a series of surges since a quarter-century-long deflationary trend for this category suddenly came to an end last November.
The fine print: The category includes things like software, mobile apps and video games, but also media storage devices like flash drives. (It doesn't include mice, keyboards or webcams.)
What they're saying: "The inclusion of flash drives and other blank media is likely a key contributor to the recent surge in the 'Computer software and accessories' C.P.I.," economists at the Federal Reserve wrote in an analysis of the spike published late last month.
- "Global prices for Flash memory chips (found in Flash drives) have more than doubled over the past year."
- "These price rises are in large part a byproduct of the data center investment boom: the massive data storage requirements for AI training are largely met by solid state drives (SSDs), which contain Flash memory."
- "We conducted several searches on multiple e-commerce platforms. We found that the average price for the 20 best-selling flash drives increased about 70% since November 2025. We also noticed that there's little to no increase in the prices of these flash drives in the year prior to November 2025."
Our thought bubble: Surging prices for once cheap flash drives — driven by the scramble for memory by AI data centers — are part of the reason memory stocks like Sandisk, Micron, Seagate Technology and Western Digital have been some of the best-performing shares in the market over the last year. Their prices and profits are soaring.
The bottom line: Few Americans are going to cite the cost of flash drives for breaking their budget, at least compared with gasoline and groceries. But the sudden leap in the price of something that had previously only seemed to get cheaper underscores the big changes consumers are facing in the AI era economy.
