Forget the new big screen TV and that family trip to Europe.
Canadians, feeling consumed by debt, are pulling back on spending in response to major spikes in food and gas prices.
A new consumer outlook report released by RBC has found the average Canadian is carrying $13,000 in consumer debt (which doesn't include mortgages) and is starting to feel the heat over spending in a major way.
This comes after years of racking up debt on credit cards and lines of credit, behaviours the Bank of Canada has repeatedly warned could push many families over the financial edge, particularly when interest rates go up, expected as early as later this year.
Even the economic downturn of 2008 wasn't enough to get Canadians to stop their wayward spending ways: a report released last year by the Certified General Accountants Association of Canada found that household debt actually reached a record of $1.41-trillion in December 2009, or nearly $42,000 for every Canadian.
But now, it appears repeated warnings about the serious consequences of overspending might be getting through as Canadians struggle to cope with rising living costs.
Gas prices rose nearly 30 per cent in May, while food prices were up more than 4 per cent in the same month.
Bank of Canada Governor Mark Carney said Wednesday that consumers shouldn't expect a respite from soaring food prices. He said agricultural prices are up 40 per cent compared to the same time last year and is only expected to get worse.
What does this mean for consumers?
Less spending, more saving, and making a lot of sacrifices.
Vacations are among the chief items on the chopping block. Nearly one-third of Canadians say they are likely to delay taking a holiday until 2012, while a similar amount plan to delay getting a new car, according to the new RBC report.
It also found that 55 per cent of Canadians are comparison shopping to find lower prices on food, while nearly half say they are following budgets more than in the past and foregoing impulse purchases.
Nearly 30 per cent of Canadians are leaving their cars at home altogether, making fewer trips and increasing their use of public transit.
Have you held off on making vacation plans ? What are some practical tips you have found to save as gas and food costs continue to soar?