Bermuda's retail sector continued to feel the economic pinch as sales growth for July 2008 slowed to more than two-thirds less than that of the same period last year and less than half that of three months previously, according to Government's latest statistics.

Despite picking up from annual percentage changes in retail sales of 1.6 percent and 1.2 percent over May and June respectively to 3.6 percent for July, with estimated sales of $106.2 million, the figures showed a third straight month of weak sales growth, in contrast to the highs of eight percent in February and 8.6 percent in April, reflecting consumers' attempts to deal with the rising cost of fuel and food.

The Department of Statistics' Retail Sales Index report also revealed that after adjusting for the annual retail sales rate of inflation, measured at 5.3 percent in July 2008, the volume of retail sales fell by 1.6 percent, marking the fifth month of real declines in sales activity this year.

But one thing that will have cheered retailers was overseas purchases declared by returning residents, meanwhile, remaining the same as July 2007 at $5.1 million, compared to to big increases of 54.5 percent in Mach, 16 percent in January and 10.9 percent inJune.

Kristi Grayston, chairman of the retail division of the Chamber of Commerce and owner of Pulp &Circumstance, said a lack of consumer confidence was having a big impact on retail sales across the board.

"Ithink it is just really borne out of a lack of consumer confidence," she said."People are just nervous and I think they are penny-pinching and sales generally seem to be slowing down. I think retailers are now preparing for a difficult fall."

Food sales grew 11.8 percent, the largest gain since November 2005, as food prices rose 5.1 percent during the month, which translated into actual groceries bought advancing by 6.7 percent.

Sales were boosted by the extra discount shopping day in July, reflecting five Wednesdays instead of four in July 2007.

Consumers saw no relief at the pump either as the combined cost of premium and mixed fuel jumped 22 percent, with service station owners reporting a 15.6-percent gain in gasoline sales for the month of July - the largest increase in 2008.

Offsetting this, however, was sales of building materials, which were down nine percent in July, highlighting the cyclical nature of the construction industry, as this time last year growth was recorded at 11.9 percent.

Construction industry retailers also noticed an emerging trend in direct purchases of materials from abroad, which has impacted local sales.

Clothing and footwear sales suffered a 5.1-percent fall below the July 2007 level as well, which will come as a big blow to retailers in that sector, who had experienced a 9.7-percent rise in July last year.

With increased demands on household budgets due to spiralling fuel and food prices, shoppers appeared to be price-conscious with limited disposable income.

Mixed performances were reported among all other store sectors, as tourist related stores continued to bear the brunt of declining sales with a further 6.2 percent drop in revenue, reflective of the 24.9 percent decline in tourist arrivals during July. In contrast, sales of pharmaceutical products grew 5.3 percent.

Elsewhere combined local and overseas retail sales totalled $111.3 million in July 2008, a $3.5 million increase on combined retail sales compared to the respective period last year. Overseas spending made up 4.6 percent of total retail sales in July, slightly below the 4.7 percent share reported last year.