Fears have been raised over the increase in overseas spending and the impact it will have on Bermuda's retail market, according to chairman of the retail division of the Chamber of Commerce, Kristi Grayston.

This follows the latest Retail Sales Index report released by the Government's Department of Statistics which revealed a 10.5 percent rise in purchases abroad in May 2007 compared to the same time last year.

And Ms Grayston said the traders' biggest concern was the $0.6 million increase, year on year, resulting from declared overseas purchases of $6.3m for May 2007.

"It is a bit of frustration really for the retail sector," she said. "There is a great deal for us to look at, but it doesn't tell us what we really want to see.

"Our biggest concern is the overseas spending which has seen a steady increase. And that is only what is being declared, so it is not reflective of overseas spending online and what is not declared."

She went on to voice her concern about the limited amount of retail space left on the island and the knock-on effect inflation was having on rising food prices.

"Two of our department stores (Trimingham's and Smith's) merged and then went under two or years ago, so there is a huge amount of retail space free and that has impacted on things," she said.

But Ms Grayston expressed her satisfaction at seeing car sales making a good recovery.

"Car sales went up this time, so it looks like they are coming back up again," she said.

And she is backing the Buy Bermuda campaign to improve the financial situation in general for retailers.

"We are trying at the moment to relaunch it, so we will hopefully have something coming out in July."

The report showed that consumers spent an estimated $97.2m on retail sales in May 2007, representing a $0.3m (0.4 percent) decrease from the $97.5m recorded the previous May.

The 0.4 percent fall in retail sales came after two consecutive months of sales gains, but on the other hand the $97.2m spent on retail sales was the highest level of spending so far this year. The main contributors to this were the food stores, apparel and all other stores sectors.

After adjusting for the annual retail sales rate of inflation, measured at 3.2 percent in May 2007, the volume of sales dropped 3.5 percent reflecting an overall decline in the total quantity of goods sold.

On the plus side grocery sales remained strong as a result of a 5.4 per cent increase in gross receipts for food stores in May 2007 compared to the same month last year.

The upward movement in sales receipts was mainly down to the 3.9 per cent rise in the price of food.

Similarly liquor sales were on the up again, rising to 4.2 per cent following a 0.3 per cent decline in the previous month to make it the fourth increase so far this year.

The 'all other stores' sector, which includes furniture, appliances, electronics and pharmaceuticals retailers, has now seen positive sales gains consistently since March 2007, with gross revenue flow improving a further 2 percent during the month of May.

Car salesmen also had reason to be cheerful with motor vehicles sales arresting a double-digit decline from the previous month, reporting a 2.6 percent increase in May 2007 from the same month last year.

Stronger sales can be directly attributed to increased consumer demand along with higher stock levels of current vehicle models.

In line with that, clothing retailers registered their fifth consecutive sales gain for the year, with gross revenue flows advanced by 7.7 percent in May 2007, improving on a 3.8 percent rise in April.

This sales increase represents the 10th consecutive month of positive gains dating back to August 2006.

In contrast to the rest of the construction industry, building material and hardware retailers reported a 31.7 percent decline in revenues for the month of May.

This marks the fourth month this year that revenues have fallen short of 2006 levels and can be attributed to failing to repeat the large contract sales of the previous year.