American consumers are not cutting back on leisure spending even as the cost of hobbies and entertainment climbs, a trend known as "funflation." The term combines "fun" and "inflation" and refers to rising prices for leisure and recreation.
Bank of America found that U.S. consumer spending on hobbies rose 7.9% last month from a year earlier, CNBC reported on the 27th.
The Bureau of Labor Statistics said its recreation price index — which covers video and audio equipment, pet services, sporting goods, photography and reading for leisure — rose 2.7% in the 12 months through August.
Spending held up despite those price increases. Sales at sporting goods, hobby, musical instrument and book stores rose 10.7% in the year through August, according to the Census Bureau. That far outpaced the 6% increase in overall U.S. retail and food service sales over the same period.
Analysts say consumers are not giving up leisure altogether but are swapping costly activities for cheaper hobbies. "When prices rise, consumers can find substitutes among various leisure activities," said John Gathergood, an economics professor at the University of Nottingham in Britain. "That means choosing hobbies they can enjoy at home instead of long-distance travel, or cooking rather than eating out."
Bank of America also cited higher travel costs as one reason hobby spending has increased. Rising fuel prices have pushed up airfares, possibly prompting some consumers to shift spending from trips to other forms of recreation. "Giving up just one overseas trip can save a considerable amount, and some of that money can go toward hobbies enjoyed at home," Gathergood said.
CNBC reported that even with living costs and leisure costs both rising, American consumers appear to be changing how they spend rather than abandoning fun. Instead of cutting leisure entirely, they are trimming expensive activities such as travel and dining out while turning to relatively inexpensive hobbies, the network said.
