Consumers are spending more on basic necessities and less on luxury goods, according to a Government report today.

Retail sales grew slightly in August – but they were fuelled by a big increase in food and gas, according to the Government statistics.

The report reveals a moderate growth in retail sales in August with the value increasing by $2.8 million to $96.1 million. “This represented a 3.1 percent growth in retail sales this month following a 2.9 percent increase in the month of July,” said the report.

But it added: “Strained household budgets due to higher prices, led consumers to spend much more on food and gasoline. In fact, service stations and food stores were the only sectors to experience double-digit gains in sales receipts during August.”

And the report said: “After adjusting for the annual retail sales rate of inflation, measured at 5.8 percent in August 2008, the volume of retail sales fell by 2.6 percent. This reflected an overall decline in the total quantity of goods sold in the retail sector for the month.”

Food stores maintained steady growth as sales grew by 11.2 percent in August 2008, following a 10.6 percent rise in July. “This represents the highest gain since May 2006. The growth in sales was attributed to a 4.2 percent rise in volume of groceries sold, coupled with a seven percent increase in prices,” says the report.

Service station owners also reported their highest growth in gasoline sales since September 2006.

Fuel sales increased 19.4 percent year-over-year mostly due to the 20.2 percent rise in the cost of premium and mixed gasoline.

The motor vehicle sector posted declining sales for the fifth month this year and dealers reported a decline of 10.3 percent in gross sales in August 2008. Vehicle dealers attributed the weak sales performance to an overall decline in demand and lower stock levels.

Clothing retailers also registered their second consecutive decline in sales revenue in August 2008. Gross turnover for this sector fell 4.6 percent during the month, on the heels of a 5.1 percent drop in July.

Retailers in the building material and hardware sector reported a fractional decline in sales of 0.6 percent in August. Fewer contract sales, led to weaker sales receipts for the building and hardware vendors. Gross revenue flows for this sector have weakened since June this year.

Residents returning to the Island from business and vacation trips declared overseas purchases of roughly $8.4 million during the month of August. This level of spending was a 13.5 percent increase from the $7.4 million spent in the same period last year.

* Full story in tomorrow's Royal Gazette.