TORONTO - With two young kids in daycare, Ryan Matthews is cutting back on nights out and vacations to better manage his family's finances.

The 35-year-old Toronto film-industry worker says recent moving expenses, combined with the surge in the cost of necessities such as food and gas, are eating a big chunk out of his family's single-income budget.

That means entertainment nights at the movies are out for Matthews and his wife.

"Maybe you're not going out for dinner as much or doing things like vacations and going to far off places. You're staying at home more and you're buying the things you have to buy," he said outside a downtown Toronto grocery store, adding his family is focusing on what it needs first.

"If we did do a vacation, it would be a lot more local," he said, referring to something like a camping trip.

A survey suggests Matthews is one of many Canadians reining in budgets by putting off luxuries such as summer vacations and new car purchases so they can better handle higher gas and food prices and try to reduce their debts.

The survey released by Royal Bank on Wednesday suggests Canadians are looking for ways to save as they grapple with gas prices that rose 29.5 per cent in May alone and food prices that grew 4.2 per cent that month.

"We think food and energy prices, as they move up, they act in a similar manner as a tax hike so it diverts money towards groceries and the gas tank whereas previously that money would be available for other spending," RBC chief economist Craig Wright said in an interview.

"When people look at their overall spending capacity and they're made aware of the fact that they have to put some more into the basics, they have to pull back somewhere and that somewhere seems to be the larger purchases and vacations."

The Canadian Consumer Outlook Index was released the same day Bank of Canada governor Mark Carney warned in a speech that agricultural product prices are much higher since the central bank's interest rates last went up in September, and food prices will continue to rise.

"As we tried to explain in April, our expectation was that these food prices would come into the economy over about a six-month period. That's been the historic experience and that's exactly what's happening," he said when delivering the central bank's July monetary policy report.

"Food, unfortunately, is going to remain relatively expensive and get a little more expensive in the coming months."