Retailers suffered further pain as sales continued to decline for the start of this year, as revealed by the latest Government figures.

The Department of Statistics' Retail Sales Index report showed that sales in volume dropped by eight percent, after adjusting for the annual rate of inflation of 3.2 percent in January.

The report said that consumers spent an estimated $78 million on retail sales during January 2010 five percent or $5 million less than the same period in 2009, driven mainly by weak sales in the motor vehicle sector and all other store types, both of which experienced double-digit year-over-year falls in sales revenue.

But there were some signs of encouragement, with apparel sales up 0.7 percent for the month, representing the first gain since June 2008, while overseas retail spending by returning residents declined nine percent over the same period.

Kristi Grayston, chairman of the Bermuda Chamber of Commerce's retail division, said the figures continued to show a worrying trend, despite not being as large as some of the declines recorded over the past 18 months.

"It is a pretty big drop," she said.

"It is encouraging to see that there is a slight increase in apparel sales, but it is only about one percent, so if you adjust it for inflation it is still negative.

"At least there was a decline in overseas spending, but that is not reflective of Internet shopping, which is not included."

Auto dealers experienced a fall in sales for the ninth consecutive month, reporting a 14 percent drop during January compared to the previous year, partly due to lower demand for vehicle brand models currently in stock.

The all other store types sector also saw a decline in sales revenue of 12 percent, as consumers cut back on spending for household goods. Meanwhile sales of pharmaceutical items and tourist-related items decreased three percent and six percent respectively versus January 2009.

Purchases of building materials and supplies contracted by 10 percent in January, with a drop in contract sales activity indicative of the slowdown in the construction industry.

Supermarkets also felt the pinch as gross receipts for food fell one percent in January 2010, despite a three percent increase in the price of food year-over-year, while liquor sales slipped six percent during the same period.

Service stations, however, benefited from an 11 percent rise in takings during January, directly attributed to a 15 percent increase in the price of fuel.