Cyberflation: How Cyberattack Costs Are Passed to Consumers

As cyberattacks grow more frequent and costly, companies are facing a barrage of financial hits – from steep regulatory fines and legal settlements to surging cybersecurity insurance premiums and massive breach recovery bills. Increasing evidence shows businesses do not simply absorb these costs. Instead, they are often passed on to consumers through higher prices for goods and services, or even reduced service quality. This emerging phenomenon, sometimes referred to as “cyberflation,” represents a hidden driver of inflation in the digital economy

This whitepaper introduces cyberflation as a systemic economic issue. We explain how the aftermath of cyber incidents, such as data breaches and ransomware attacks, creates financial pressures that companies offset by charging customers more or reducing their offerings.

Drawing on recent cybersecurity surveys, economic data, and real-world breach examples, we connect the dots between cyberattacks and rising consumer prices. The narrative highlights key factors fueling this trend: the rising costs of cyber incidents, repeated breaches that compound expenses, underinvestment in security leading to greater damages, and even stock market dynamics that incentivize cost transfer. Throughout, technical concepts are explained in accessible terms to engage both general readers and cybersecurity leaders.

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