Page last updated at 13:27 GMT, Wednesday, 15 October 2008 14:27 UK

US retail sales decline sharply

Cars drive across the Golden Gate Bridge October 10, 2008 in San Francisco, California
Consumers are cutting back on big purchases like cars.

US retail sales fell sharply last month, recording the biggest monthly decline in more than three years, as hard-up consumers avoided the shops.

The US Commerce Department said the value of sales fell 1.2% from August and was 1% below September 2007.

The steep drop was led by auto sales, which fell by 3.8%.

The figures underscored fears that the wider economy is now being hit by the financial crisis. The fall was much steeper than analysts had forecast.

"There can be no doubt now that the economy is in recession," said Ian Shepherdson, an economist at High Frequency Economics.

Auto sales plunged with consumers opting to defer big purchases and with car financing becoming harder to secure.

However, retail sales still declined by 0.6% even when car sales were stripped out of the data.

Official data also showed that US wholesale prices fell 0.4% in September from August, a sign that the cost of finished goods could soon fall.

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