WASHINGTON – U.S. retail and food service sales last month fell 2.8 percent compared with September, in their sharpest-ever decline, the U.S. Commerce Department’s Census Bureau reported today.

The October plunge – to $363.7 billion in total sales – followed month-over-month declines of 1.3 percent in September, 0.4 percent in August and 0.1 percent in July, making the current retail slump the longest since the data series began in 1992.

Analysts had expected sales would plunge 2.1 percent in October – after falling 1.2 percent in September, based on the government’s original report last month (READ MORE) – according to the median forecast from a survey of 73 economists by Bloomberg News. (Their October estimates ranged from a month-over-month sales gain of 1.4 percent to a decline of 6 percent.)

Total sales excluding motor vehicle and part dealers – for which sales plunged 5.5 percent, accelerating from September’s 4.2 percent decline – fell 2.2 percent, nearly doubling the Bloomberg survey’s 1.2-percent forecast.

Meanwhile, retail trade sales fell 3.1 percent last month, while sales excluding gasoline fell 1.5 percent, the Census Bureau said. Gas station sales fell a record 12.7 percent in October, as the average cost of a gallon of gasoline fell $1 per gallon nationwide. (READ MORE)

The only month-over-month gains were at miscellaneous retailers (+0.7 percent), health and personal care stores (+0.4 percent) and restaurants (+0.3 percent), the Census Bureau said. Grocery-store sales were unchanged from September.

“Since mid-September, rapid, seismic changes in consumer behavior have created the most difficult climate we’ve ever seen,” Brad Anderson, CEO of Best Buy, said on Wednesday as the electronics retailer pared its sales forecast for November through February. J.C. Penney, Macy’s Inc., Target Corp. and Gap Inc. have all posted October declines in same-store sales, although sales rose last month at Wal-Mart Stores Inc., which credited an increase in discount grocery shoppers.

Compared with October 2007 (READ MORE), total retail and food service sales fell 4.1, the Census Bureau said. In other year-over-year changes, retail trade sales fell 3.1 percent, furniture and home furnishing sales fell 13.5 percent and sales at motor vehicle and parts dealers fell 23.4 percent.

“The September-October credit jolt to the economy is showing up in all of the numbers now,” said Ellen Zentner, a senior U.S. macroeconomist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, told Bloomberg Television. “We’re expecting the worst recession, possibly, post-World War II.”

U.S. stock markets fell on the news, heading toward their second straight weekly loss, while Treasury securities rose in heavy trading today, according to Bloomberg News. “The retailers are just confirming what everybody already knows; the economy is in bad shape, people are not spending,” said Malcolm Polley, president of Stewart Capital Advisors in Indiana, Pa. “We have too many retailers and some of them will go away.”

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.