NEW YORK (CNN/Money) - Another bout of cooling demand for autos chilled overall retail sales last month, although early holiday discounts helped prop up sales at U.S. chain store sales, according to a government report issued Tuesday.

The Commerce Department reported that overall retail sales slipped 0.1 percent in October, compared with a revised 0.3 percent increase in September. Retail sales last month were originally reported to have inched up 0.2 percent

A sharp drop in sales of automobiles combined with a pullback in sales at the gasoline stations to deliver the soft headline number.

A consensus of economists surveyed by Briefing.com had forecast retail sales to fall by 0.7 percent.

Excluding auto sales, retail sales rose a better-than-expected 0.9 percent. Economists, on average, had expected an increase of 0.3 percent, buoyed by last month's continued strength in chain-store sales.

As was widely expected, auto sales fell 3.6 percent in September. Gasoline station sales eased 0.8 percent.

"Auto numbers reflect the ripple effect of incentive programs pulling forward sales from the fourth quarter into the third quarter," said Nariman Behravesh, chief economist at Global Insight.

Auto sales surged over the summer as consumers rushed to take advantage of the "employee discounts" offered by the Big Three auto makers.

Explained Behravesh, "With these discounts out there, people who were thinking of buying cars later in the year bought them earlier instead."

Stripping out autos and service station sales, it was a mostly positive picture across the board. Consumers lapped up the pre-holiday bargains, especially at specialty apparel stores. Clothing sales jumped 3.1 percent last month compared with a 0.3 percent decline the previous month.

An almost $1 retreat in gas prices at the pump from their record levels of $3 a gallon in the immediate aftermath of Hurricane Katrina has also helped spur spending on clothes, shoes and other items, Behravesh said.

The same factors probably helped boost sales at department store chains and general merchandise stores where sales last month rose a strong 1.5 percent and 1.2 percent respectively.

Building material sales rose 3.1 percent, furniture sales climbed 0.7 percent, sales of health and personal care products grew 0.4 percent while food and beverage sales rose 0.7 percent.

Americans also ate out more last month, resulting in a 0.9 percent increase in sales at restaurants and other food service outlets.

As retailers and consumers gear up to enter the peak of the pivotal holiday shopping, Behravesh said he's confident that consumer spending will hold up reasonably well even against the potential for higher home heating bills .

"It'll be a decent Christmas for retailers, not a terrible one," he said. "Even with oil prices higher, most other prices have stayed tame across the board. There's decent growth in the job market and in the rest of the economy. But if interest rates rise further, that will be a squeeze on consumers."

_________________

Forget about Black Friday. Many retailers are already slashing prices. Click here for more.

Wal-Mart hoping for some holiday magic. Click here for more.

Black Friday at Wal-Mart revealed? Click here for more.

Quick & easy gift returns? Not this year. Click here for more.