Four in 10 families, equivalent to 20 million, will have to cut back on their Christmas spending this year, as the rising cost of living takes its toll.
Many families are also worried about being able to afford Christmas at all, and one in four plans to buy less presents for fewer people than in previous years, according to research from consumer group Which?.
To combat the financial strain, a third of shoppers have begun buying presents early to try to spread out the cost.
Top Christmas money-savng tips
Families are also more likely to recycle used presents instead of forking out for new ones, with 13% saying they will be giving away any unwanted presents to other people.
Some 10% will be also opting for an artificial tree instead of a real one, which can be reused next year.
In order to pay for the festive season many people will borrow money and push themselves further into the red, and 13% admit to paying for this Christmas on a credit card.
Separate research this week from VoucherCodes.co.uk reveals that more than one in 10 families are still facing an average debt of £1,078 from last Christmas.
And worryingly it reveals the average price of Christmas Day 2011 is predicted to hit £692 per person.
Richard Lloyd, executive director at Which?, says: "Cash-strapped consumers are really feeling the impact of rising costs this Christmas. People are being forced to cut back.
"But Christmas doesn't have to be cancelled. Savvy shoppers can save money with online deals, discount days and pre-Christmas sales. You should compare prices between stores and don't be afraid to haggle to get the best price."
Are you worried about how to afford this Christmas? Check out our guide on how to cut costs over the festive season: http://www.moneywise.co.uk/cut-your-costs/shop-smart/10-ways-to-cut-the-...