Move Aside Inflation, A New Phenomenon Called 'Funflation' Emerges

A new phenomenon has emerged in the United States known as ‘funflation’. This term is linked to the rising costs of leisure and entertainment in the US. However, this situation has not yet prompted the public to cut their spending on hobbies.

‘Funflation’ describes the increase in costs for recreational and entertainment activities. Despite rising prices, US consumers continue to spend money on various activities, ranging from arts and crafts to outdoor sports and video games.

Recent analysis from Bank of America shows that spending on hobbies increased by 7.9% year-on-year in August 2026. This figure is more than double the growth in the number of transactions, which only reached 3.4%. This implies that consumers are not only conducting more transactions for hobbies but are also spending more money per transaction.

“Funflation is the rise in the cost of recreational activities, visible in everything from petrol prices for weekend drives to the price of ice cream during holidays,” said John Gathergood, an economics professor at the University of Nottingham, UK, to CNBC International.

Data from the US Bureau of Labor Statistics (BLS) also shows that the recreation index—which includes video and audio products, pets, sporting goods, photography, and recreational reading materials—rose by 2.7% over the 12 months leading up to August. Meanwhile, sales in sporting goods stores, hobby shops, musical instrument stores, and bookstores surged by 10.7% during the same period. This growth far outpaced the increase in total US retail sales and food services, which reached 6%.

Hobbies Replacing Expensive Holidays

One reason consumers continue to spend on hobbies is a shift in consumption patterns. The rising cost of travel has led some to choose activities closer to home.

“When prices rise, consumers may switch between various activities,” said Gathergood. He noted that hobby activities at home can replace holiday travel, just as cooking at home can replace dining out at restaurants.

Consequently, the increase in hobby spending does not necessarily mean the population is becoming more extravagant. Part of this expenditure may represent a shift from other activities that are now considered too expensive.

Surging Airfares

Bank of America’s analysis suggests that the increase in hobby spending in recent months is likely related to reduced travel due to rising fuel prices. Jet fuel prices have surged amidst the US-Iran conflict.

Data from the International Air Transport Association (IATA) shows that jet fuel prices reached US$194 per barrel for the week ending 18 September, an increase of 116% compared to the previous year’s average. US airfares also jumped 26.5% year-on-year in August, according to US government data.

“By reducing overseas travel, consumers can free up a significant amount of money to spend on hobbies at home,” said Gathergood.

Dan Wasiolek, senior equity analyst at Morningstar, stated that the Covid-19 pandemic also accelerated the shift in consumption patterns towards spending on experiences rather than goods.

Millennials Leading Hobby Spending

Interestingly, hobby spending varies by age group. Bank of America’s analysis found that older Millennials were the largest consumers of hobby spending in the three months leading up to August.

Their spending was more than double that of Gen Z, who recorded the lowest spending. Bank of America estimates this difference shows that younger generations tend to choose relatively lower-cost hobbies, such as arts, crafts, and board games.

This trend is even moving towards ‘granny core’ activities, such as knitting, sewing, and baking. On the other hand, video games recorded an increase in per capita spending across almost all age groups in the 12 months leading up to August.

Even Gen Z, which recorded the smallest increase compared to other groups, still increased spending on video games by up to 20%. This phenomenon demonstrates that despite rising recreational costs, US consumers are still attempting to maintain space for entertainment and hobbies within their budgets, including by reallocating spending away from increasingly expensive activities.