'Funflation': Americans cut trips but spend more on hobbies

The cost of leisure in the United States is climbing sharply, yet consumers are spending more on hobbies — a trend analysts are calling "funflation," a portmanteau of "fun" and "inflation" that describes the broad rise in recreational costs.

CNBC reported Sunday (local time) on a Bank of America analysis showing that spending at hobby-related businesses — including arts and crafts stores, hobby shops, and retailers selling ski, hiking, camping and scuba diving equipment — rose 7.9% year-on-year in August. Bank of America said consumers not only made more hobby-related purchases but also spent more per transaction.

The US Bureau of Labor Statistics said its recreation price index — which covers video and audio equipment, pets and related services, sporting goods, photography and leisure reading — rose 2.7% in the year through August.

Even as leisure prices have risen, consumer spending in the category has continued to climb. The US Census Bureau found that sales at sporting goods, hobby, musical instrument and bookstore retailers grew 10.7% over the same period — far outpacing the 6% increase recorded across all US retail and food service sales.

Rising travel costs — driven in part by surging jet fuel prices — are seen as a key factor behind the uptick in hobby spending. According to the International Air Transport Association, jet fuel was priced at $194 per barrel as of Sept. 18, a 116% jump from the prior year's average. US federal data also showed that domestic airfare rose 26.5% year-on-year in August.

Analysts say consumers feeling the strain of higher travel costs have shifted their spending toward less expensive hobbies closer to home — and are willing to pay more for those pursuits even as their prices have also risen.

Bank of America said the recent surge in hobby spending "is likely linked to the burden of travel costs," adding that jet fuel prices have spiked in the wake of the US-Iran war, pushing up the cost of international travel and prompting "consumers to redirect spending from travel toward hobbies they can enjoy at home."

John Gathergood, a professor of economics at the University of Nottingham in the United Kingdom, described funflation as "a broad rise in the cost of leisure activities," saying it is showing up across a wide range of categories — "from the gasoline you put in your weekend vehicle to the ice cream you buy on vacation." He added that while hobby spending has increased, "there is a possibility that spending on other activities people substituted away from has declined."