May 16/Toronto/CNW -- Most (84%) Canadians believe the food they typically purchase has increased in price over the past year, according to the quarterly RBC Canadian Consumer Outlook Index (RBC CCO). With rising food prices eating into their household budgets, an overwhelming majority of Canadians (91%) say they will tighten their belts and make smarter decisions when purchasing food.

The survey found that the average Canadian spends $411 per month on groceries and one third (33%) say rising food prices has had a significant impact on their budget, with 43% cutting back on other expenses. Also, increases in food prices are impacting shopping habits with more than half of Canadians (57%) comparison shopping for food more than before, and following a budget more than before and buying less on impulse (41%); others are looking to other parts of their life to deal with rising food prices such as using their vehicle less (15%).

"In light of concerns over escalating food prices, more Canadians are looking for cost-saving strategies they can use on their next trip to the grocery store," said Jason Round, head, Financial Planning Support, RBC Financial Planning. "Creating a budget that covers all of your expenses - including must-haves such as groceries - can help keep your spending under control. Since costs can change, it's essential to regularly review your budget to stay on track and make any adjustments necessary to help balance living for today and saving for future goals."

Food inflation rose 2.4% last year, after increases of 3.8% and 1.4% in 2011 and 2010, respectively. A 2012 RBC Economics report anticipated that last year's U.S. drought could send food prices back up between 3.0 and 4.0% this year. The report also noted that it takes approximately six months for raw food commodity price changes to pass through to prices at the retail level.

"Even though we are seeing rising food costs, overall inflation should remain below 2% in 2013," said Paul Ferley, assistant chief economist, RBC. "We are in an environment of modest growth, so pressures from rising food prices won't dominate inflationary expectations."

The RBC CCO indicates that economic mood in Canada has darkened over the last quarter, with the national overall index dropping six points to rest at 82 -- the first time in nearly two years that there has been an overall decrease in the national index. Only six-in-ten (60%) Canadians think the economy is in good shape (down a significant eight points since last quarter). More Canadians believe the economy will worsen in the next year (30%) rather than improve (26%).

According to the Index, while general perceptions of the economy have worsened, job anxiety has actually dropped, returning to more modest levels of 19% after a temporary spike to 24% earlier this year.

RBC Economics is currently forecasting the Canadian economy will grow by 1.8% in 2013, and will be releasing its next Economic and Financial Market Outlook in June.