SINGAPORE - Retail sales in Singapore fell in August from a year ago, with motor vehicle sales taking a hit amid a lower certificate of entitlement quota this year.

Takings at the till dropped 2.8 per cent year on year in August, snapping six months of increases that owed much to comparisons with last year, which saw stricter Covid-19 curbs.

The dissipation of the low base effects amid continued Covid-19 disruptions had seen retail sales edge up only 0.2 per cent year on year in July.

Excluding motor vehicles, retail sales in August were at a similar level from a year ago, according to data released by the Singapore Department of Statistics (SingStat) on Tuesday (Oct 5).

Retail sales value - at an estimated $3.4 billion in August - continued to be below pre-Covid-19 levels, SingStat noted.

UOB economist Barnabas Gan said the surprise decline in retail sales suggests that the initial pent-up domestic demand seen in the first half of this year had materially softened.

Consumers here may have stayed cautious given the weaker labour market and heightened Covid-19 concerns, he added.

"August's decline in retail sales underlines the importance of overseas-led demand in providing retailers with a sustainable and resilient growth environment," said Mr Gan.

He added that retail sales are forecast to be slower in the remaining months of this year, given the dissipation of low base effects and tightened restrictions since last month.

"Still, domestic retailers will likely see some support as borders reopen gradually in the months ahead," he said.

Ms Selena Ling, OCBC Bank's chief economist and head of treasury research and strategy, said that despite the latest data, retail sales are likely to expand by around 9.6 per cent year- on-year in 2021.

This compares with the 15.3 per cent contraction last year during the worst of the pandemic, she noted.

On a month-on-month seasonally adjusted basis, takings slipped 0.6 per cent in August over the previous month, compared with the 0.9 per cent increase in July, according to Tuesday's data.

Online retail sales made up an estimated 14.1 per cent of total sales in August, up from the 13.8 per cent recorded the previous month.

Online computer and telecommunications equipment sales accounted for more than half, or 56.5 per cent, of the industry's total sales.

Several segments, such as food and alcohol, watches and jewellery, supermarkets and hypermarkets and petrol service stations, saw higher year-on-year sales in August.

However, sales of motor vehicles, department store items and optical goods and books shrank compared with a year ago.

Meanwhile, sales of food and beverage (F&B) services fell 6.7 per cent in August from a year ago, after a 6 per cent drop in July.

This was due to stricter restrictions in August to curb the spread of the virus. Dining in was suspended until Aug 9, and allowed for groups of up to five fully vaccinated persons from Aug 10.

In comparison, dining in for groups of up to five was allowed for the whole of August last year.

On a month-on-month seasonally-adjusted basis, F&B services turnover fell 2.1 per cent in August, compared with a 12.9 per cent increase in July.

Total F&B services sales value came in at $628 million in August, with online sales making up 38.8 per cent of takings.

Within the sector, restaurants' turnover fell 24.5 per cent compared with a year ago. However, sales at fast food outlets rose 8.7 per cent while takings at cafes, food courts and other eateries climbed 3.1 per cent, due to higher demand for food deliveries.

Food caterers' turnover rose 0.1 per cent compared with a year ago, reversing a 45.5 per cent decline in July.