The University of Michigan's consumer sentiment index released Friday shows the index plunged to 50 this month, a 14.4% drop from May and the lowest reading since the survey began in the late 1970s.

The survey indicated declines in every component, reflecting a bleak vision from respondents: The year-ahead outlook tumbled 24%, while Americans' assessments of their personal financial situations worsened by 20%.

More than half of consumers surveyed said they expect their incomes to go up over the next year. But at the same time, 53% responded that they anticipate that inflation will outpace any rise in income.

"While consumers are relatively optimistic about the stability of their incomes, their perceptions of the economy are much more strongly influenced by concerns over inflation," Joanne Hsu, director of the survey, said in a statement.

"As higher prices become harder to avoid, consumers may feel no choice but to adjust their spending patterns, whether through substitution of goods or foregoing purchases altogether," Hsu continued. "The speed and intensity at which these adjustments occur will be critical for the trajectory of the economy."

The latest consumer price index from the Labor Department shows inflation unexpectedly surged 8.6% in May, the fastest pace since December 1981. 

The rising prices have eaten away at Americans' earnings as inflation has outpaced wage gains for months, sparking recession concerns as households brace for faster price increases."

25 Year Chart of University of Michigan Consumer Confidence: