WASHINGTON – U.S. retail and food service sales last month fell to $375.5 billion, in their sharpest month-over-month decline since August 2005, the U.S. Commerce Department’s Census Bureau said in a report today.

Total sales in September were off 1.2 percent compared with the month before, accelerating from month-over-month declines of 0.4 percent in August and 0.1 percent in July (READ MORE), the Census Bureau said.

Last month’s drop-off in sales was nearly twice as sharp as expected, based on the median forecast from a survey of 75 economists by Bloomberg News. (Their September estimates ranged from a decline of 1.5 percent to an increase of 0.1 percent.)

Excluding gasoline, overall sales fell 0.2 percent last month, the Census Bureau said. Sales excluding motor vehicles and parts fell 0.6 percent in September, as auto dealerships and parts stores saw sales fall 4.2 percent.

Retail trade sales fell 1.2 percent last month. Apart from the auto industry, the steepest declines were at furniture and home furnishings stores, which recorded decreases of 2.3 percent; and department stores or electronics and appliance vendors, at which sales fell 1.5 percent compared with August. Internet and other non-store retailers’ sales fell 0.8 percent, miscellaneous retailers saw a 0.6-percent decline, sales at food-services and drinking places fell 0.5 percent and grocery sales fell 0.4 percent.

The only month-over-month increase was in gasoline station sales, which edged up 0.1 percent in September.

Analysts blamed the nation’s rising unemployment, falling home prices and burgeoning credit crisis. “Consumers are hunkering down,” Brian Bethune, chief financial economist at Global Insight Inc. in Lexington, Mass., told Bloomberg News. “The fourth quarter is guaranteed to be terrible.”

Last month’s total retail and food service sales were down 1.0 percent compared with September 2007 (READ MORE), although sales excluding motor vehicles and parts were up 3.6 percent and auto and motor vehicle sales fell 20.2 percent, the Census Bureau said. In other year-over-year changes, retail trade sales fell 1.4 percent, furniture stores fell 10.7 percent, department store sales fell 5.3 percent, electronics and appliances were down 2.0 percent and miscellaneous retailers’ sales fell 1.3 percent. But gas station sales rose 17.8 percent, grocery sales rose 5.2 percent, sales at food service and drinking places rose 2.2 percent and sales at non-store retailers rose 3.1 percent.

Meanwhile, third-quarter retail and food service sales were up 0.5 percent compared with the same July-through-September period in 2007.

U.S. stock markets fell on the news, extending their slump into a second consecutive day, Bloomberg News said.

Additional information, including the full Advance Monthly Sales for Retail Trade and Food Services news release, is available from the U.S. Commerce Department’s Census Bureau at www.census.gov/retail.