Retail sales in the run-up to Christmas achieved their lowest growth since 2001, according to the latest statistics released by Government, as retailers said December's general election was a major factor in weakened spending.

The Retail Sales Index revealed that consumers spent an estimated $111 million in Bermuda's stores during December 2007, representing a fractional gain of $800,000 (0.7 percent) above the December 2006 level.

Even more revealing, however, was the fact that, after adjusting for the annual retail sales rate of inflation, measured at 1.8 percent in December last year, the volume of retail sales dipped by 1.1 percent, in contrast to the same time the previous year when real gains were made of close to four percent in sales volume.

Meanwhile, for the whole year, local retail sales were estimated at $1.11 billion, 3.4 percent above the 2006 level, while combined local and overseas trade increased 3.5 percent to $1.18 billion in 2007.

Retailers pointed to the general election as the main reason behind the weakened holiday spending, despite all sectors reporting slight increases in sales activity, with the exception of motor vehicle and building material stores.

Kristi Grayston, chairman of the retail division of the Chamber of Commerce, concurred with that view.

"It is no big surprise — I mean, every retailer felt it was just a disappointing season for us," she said. "The election made a big difference — people were focused on other things and hopefully next year will be better.

"It was going really well, looking like it was going to be a record December for sales. As we got into the fall things seemed to be going so well, but nobody predicted they were going to call an election then and it had a big impact on trade."

The sectors that had the most impact on overall growth were retailers in the food stores, all other store types and service stations.

Gross receipts for food advanced 4.4 percent in December 2007, mainly down to the 3.1 percent rise in the price of food items over the month, while food store sales grew by 5.9 percent for the entire year, slightly below the 6.1 percent increase in 2006.

The "all other store" types, which include furniture, appliances, electronics, pharmaceuticals and personal care supplies sellers, recorded a modest sales gain of one percent for the month of December, largely driven by the pharmacy sub-sector, with an expansion in floor space meaning a wide range of product lines and items were stocked for the holiday shopping period.

Another sector to show positive signs of growth was the service stations, which reported a 9.5 percent gain in gas sales, mostly attributed to the 8.2 percent rise in the cost of premium and mixed fuel.

Some gas stations also had longer opening hours, leading to a boost in sales revenue, and contributing to a 5.8 percent growth in sales for the sector during 2007, albeit slower than compared to the 11.7 percent increase the previous year.

On the flipside, motor vehicle sales experienced negative sales for the fifth consecutive month, declining by 16.6 percent, in part accounted for by lower stock levels.

For the year, motor vehicle retailers saw a 5.7 percent drop in sales, following a 1.6 percent fall in 2006.

Purchases of building materials and supplies abated in December as construction activity slowed during the holiday season, with the sales for the sector falling by 5.3 percent as a result.

In total, aggregate sales revenue for the sector fell three percent in 2007, compared with a seven-percent increase in 2006.

Elsewhere, residents returning to the Island from business and holiday trips declared overseas purchases of goods worth $7.8 million during the month, reflecting a $100,000 (1.7 percent) increase. For the year, overseas spending represented a 6.6-percent rise in total retail sales in December, slightly higher than the 6.5 percent recorded the previous year.