Retail sales for August slumped by the biggest amount in more than 18 years as one of the Island's top retailers warned that there is worse to come.

Sales dropped 11.5 percent by volume (taking inflation into account) and 9.5 percent or $8.8 million by value — the largest year-on-year decline since May 1992 — according to the Department of Statistics' Retail Sales Index, marking the 28th straight month of volume decreases.

Among the main drivers were the motor vehicle stores sales which plummeted more than 30 percent and receipts for building materials which fell 22.7 percent, while liquor sales, which had held up well over the past year, slipped 11.7 percent, all on a month-to-month basis.

And Kristi Grayston, chairman of the retail division of the Bermuda Chamber of Commerce, revealed that September's figures would be even worse.

"The bad news is that September is going to be worse," she said.

"9.5 percent is a pretty significant decrease and it is not just an issue of buying locally but an indication that people are just not spending money." Ms Grayston said that residents were tightening their belts across the board, reflected in a 3.7 percent decrease in overseas purchases over August 2009 and a 4.3 percent decline in grocery shopping despite a 3.4 percent increase in the price of food.

"I think the economy is in a much worse shape than some people believe it to be," she said.

"The problem is that, as retailers, we have been living through tough times for almost two years now and we are not in a position to handle a tough economy for a sustained period of time."

Pointing to the number of empty shops and retail spaces in Hamilton as an indicator of the impact of the recession, Ms Grayston said that she was not surprised by the figures, adding that the demise of the construction industry had impacted everyone, with businesses that specialise in hardware products being forced to branch out into other areas and encroach on others' share of the market.

"I think that people are just not spending, period," she said. "And of course, we have no idea of what they buy online either because that is not being recorded."

Food stores reported their first drop in sales since April, having returned positive numbers for at least 23 out of the past 26 months, which Lindo's manager Zach Moniz puts down to a decrease in residents with a significant reduction in the amount of work permits of the past two years.

Mr. Moniz said that a busy day now was like a normal day prior to the economic downturn and shoppers were becoming more cost conscious.

"Health and beauty is an area that is down, for example, with many people who don't need the most expensive shampoo going for the one they can afford instead," he said.

Amid a smaller number of "discerning" consumers who spend large amounts of money on their goods, such as the more expensive wine, liquor sales have taken a hit, but Lindo's has actually seen a 10 percent rise in sales. Meanwhile food and liquor sales were also negatively affected by one less Saturday during the month compared to last year.

Richard Hartley, managing director of Burrows Lightbourn, which sells to the supermarkets, said a recessionary trend showed that people were being more careful with their money and not spending as before.

Mr. Hartley said that some stores seemed to be doing better, possibly at the expense of others, offering specials and discounts for the price sensitive customer.

Overall, he said that his company's wine business remained buoyant despite the state of the economy, but the beer and spirits side had been impacted by a decline in the number of consumers.

Motor vehicle stores sales revenue was down for the first six months this year so far due to weak consumer demand for the current inventory of models.

Building materials continued to fall for the 13th consecutive month, highlighting an overall reduction of building activity in the construction industry.

Elsewhere gross receipts for all other store types sector fell by 8.9 percent, with the boat and marine supplies sub-sector suffering the largest drop of 33.8 percent during August and furniture, appliances and electronics retailers experiencing a decrease of 13.1 percent for the month. Additionally, sales revenue for pharmaceutical retail outlets and tourist related stores slid 4.8 percent and three percent respectively.

Apparel traders recorded a 1.4 percent decline in sales and service stations takings were 2.1 percent below the previous year's level, as gasoline prices climbed 0.5 percent year-over-year.