Households became the most pessimistic they've been in almost four years as gasoline and food prices surged and wage growth stalled, leaving consumers less willing and able to spend.
An index that measures confidence among households with two or more people slid to 39.8 last month from 42.8 in October, the Cabinet Office said Tuesday.
A reading below 50 means pessimists outnumber optimists.
Prime Minister Yasuo Fukuda's Cabinet approved a plan Tuesday to support low-income earners hit by rising oil prices. As the job market worsens, it is unlikely that consumers, whose spending accounts for more than half of the economy, will support the nation's export-driven expansion at a time when U.S. demand is waning.
"Consumer sentiment is in shreds," Yuji Shimanaka, chief economist at Mitsubishi UFJ Research and Consulting, said before the report was published. "Their bleaker outlook symbolizes Japan's weakening economy."
A separate report Monday showed sentiment among merchants fell in November to a four-year low.
Retail gasoline prices rose to their highest-ever level last week, the Oil Information Center reported. Crude oil reached a record $99.29 a barrel last month.
"We must alleviate the burden of petroleum prices on Japan's economy," economic and fiscal policy minister Hiroko Ota said Tuesday.
"We can't expect much growth from consumer spending this quarter as their confidence deteriorates," said Yoshiki Shinke, an economist at Dai-ichi Life Research Institute.
Wages were unchanged in October after dropping in nine of the previous 10 months. The unemployment rate held at 4 percent and the ratio of jobs available to applicants fell.