July 15 (Bloomberg) -- Singapore's retail sales growth slowed in May as consumers bought fewer cars and spent less on furniture amid the fastest inflation in 26 years.

The retail sales index gained 4.8 percent from a year earlier, after climbing 7.5 percent in April, the Statistics Department said today. That was below the median forecast of a 6.2 percent increase in a Bloomberg News survey of 16 economists. Excluding vehicles, sales advanced 7.9 percent.

Singapore's consumer prices are climbing at the fastest pace since 1982, spurred by surging commodity and energy costs. Faster inflation has left consumers with less to spend, hurting an economy that expanded at the slowest pace in five years in the second quarter.

``Consumer sentiment isn't very strong,'' said Alvin Liew, an economist at Standard Chartered Plc in Singapore. ``We may see spending taper off further in the second half.''

Adjusted for seasonal factors, retail sales in May rose 0.3 percent from April. Excluding cars, the index added 2.4 percent, the government said.

Vehicle sales in May declined 1.9 percent from the same month in 2007. From April, auto sales dropped 3.4 percent.

Oil prices have doubled in the past year, and reached a record $147.27 a barrel on July 11. Prices of grains such as rice and wheat have also reached unprecedented levels this year, increasing costs for consumers.

Gas Stations

Sales at gas stations in Singapore jumped 30.2 percent in May from a year earlier, and gained 6.7 percent from the month before, today's report showed. The government doesn't subsidize fuel, prompting oil companies to pass on rising costs to motorists.

Purchases at supermarkets grew 13.9 percent from a year earlier, and climbed 4.9 percent from the previous month. The Southeast Asian city-state of 4.6 million people imports about 90 percent of its food.

The annual Great Singapore Sale shopping festival, which runs from the end of May until July, boosted spending at department stores and on luxury goods. Department store sales gained 12.1 percent in May from the same month in 2007, and increased 14.7 percent from April.

Purchases of furniture and household equipment dropped 5 percent from a year earlier. Apparel and footwear sales rose 11.2 percent and those of watches and jewelry advanced 7 percent.

Consumer spending may wane in the second half, said Jannie Tay, president of the Singapore Retailers Association.

``When consumer confidence and the economy are down, people certainly will be more careful'' about spending, Tay said in an interview with Bloomberg Television today. Year-end sales may be ``worse than last year's. It's going to be difficult to be profitable with higher costs.''

To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net

Last Updated: July 15, 2008 01:00 EDT