The Nationwide Consumer Confidence index dropped by 10 points to 38, the lowest since records began in 2004.
The spending component, which examines people’s appetite for buying goods, dropped even further to 52 points last month – its lowest since the survey began.
The number of people who believe the economic situation will be worse in six months time increased by 6% to 42% in February.
The number of people who believe there will be fewer jobs available in six months time rose by five percentage points to 63%.
The group said that news of the economy contracting in the final quarter of 2010 had added to the gloom, as consumers came round to the view that the economy faced a “slow grind” rather than a quick return to form.
High inflation raised concerns that the Bank of England could increase interest rates during the second quarter, adding additional pressure on household budgets.
Robert Gardner, Nationwide’s chief economist said: “There are many factors that may be holding back confidence at the moment. The labour market remains fragile, with the unemployment rate still high and wage growth weak.
“Inflation is showing few signs of easing, and high fuel prices and the VAT increase have further eroded disposable incomes in recent months.
“Furthermore, news that the economy shrank in the final quarter of 2010 will have done nothing to lift already dampened spirits.”
