Grafdigger's Cage has two relevant abilities. The one pertinent here reads: "Players can't cast spells from graveyards or libraries." Flashback is a keyword ability that allows a player to cast a spell from their graveyard by paying its flashback cost (CR 702.34). Since Flashback casting involves casting a spell directly from the graveyard, Grafdigger's Cage's prohibition applies directly.
Under CR 702.34a, casting a spell using Flashback means you are casting that card from the graveyard zone. Grafdigger's Cage creates a continuous effect (CR 613) that simply makes it illegal for any player to cast spells originating from the graveyard. Therefore, the Flashback alternative cost cannot be used while the Cage is on the battlefield.
It is important to note this applies to ALL spells cast from the graveyard, not just creatures. Instants and sorceries with Flashback (like Faithless Looting or Snapcaster Mage's granted Flashback) are equally locked out. The Cage does not care about the card type — only the zone from which the spell would be cast.
Concrete example: You have Faithless Looting in your graveyard and want to cast it via Flashback for {2}{R}. Your opponent controls Grafdigger's Cage. You cannot legally cast Faithless Looting this way, because the Cage prevents casting any spell from the graveyard. The card simply stays in your graveyard.
Note that Grafdigger's Cage does NOT prevent cards from being put onto the battlefield from the graveyard by non-cast effects (like Unburial Rites' Reanimate effect activating separately), but since Flashback specifically involves casting, it is fully blocked (CR 702.34b also exiles the card if it would leave the stack, but you never even get that far).
Unofficial fan resource — not affiliated with or endorsed by Wizards of the Coast. Answers are AI-generated estimates grounded in the Comprehensive Rules and are not a substitute for an official judge. Verify anything match-critical.