Retail sales for August plunged the most in more than 18 years – and September's sales will be worse.

That was the grim warning from the Bermuda Chamber of Commerce, which said local residnts are reducing their spending.

The Department of Statistics said in its Retail Sales Index report that 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.

It was the 28th straight monthly decline in sales volume.

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.

Also recording declines were declarations by returning residents and grocery stores, which saw a 4.3 percent decline – despite a 3.4 percent increase in the price of food.

"The bad news is that September is going to be worse," said Chamber of Commerce Retail Division chairwoman Kristy Grayston. "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.

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

"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."

Food stores reported their first drop in sales since April, having returned positive numbers for at least 23 out of the past 26 months.

Lindo's manager Zach Moniz put the decline down to a decrease in residents with a significant reduction in the amount of work permits of the past two years.

Mr. Moniz said 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.

Full story: Business, Page 25