CAR sales last month plunged by nearly 40 per cent as rising prices and concerns about the economy forced consumers to tighten their belts. Falling property prices and a slowdown in housing sales also caused a 10 per cent year-on-year slump in purchases of consumer durables, such as televisions. But economists believe the worst is nearly over for the territory's hard-pressed retailers and anticipate a pick-up in sales. While retail sales for the month were down by one per cent, there were signs it has picked up since February, when sales were down by more than five per cent. During the same period last year, consumer expectations were buoyed by a record high on the stock market, with the Hang Seng Index at 12,201 points and surging property prices. Since then, consumers' disposable income has been knocked by seven interest-rate rises, a 30 per cent slump in property prices and falling returns from world stock markets. According to provisional government figures, retail sales in March were worth $16.6 billion - a seven per cent increase over February. During the past three weeks confidence has been growing as the Hong Kong stock market rallied and interest rates began to show signs of having peaked. Graham Muirhead, a director of HSBC Asset Management, said: 'It is a sign of a slowing economy but nothing disastrous. There are already signs that the market is picking up.' The slump in car sales had been predicted by local retailers following the slump in the US dollar, to which the Hong Kong dollar is pegged, which forced up prices of imported cars from Japan and Germany by more than 10 per cent. Motorists are also wary because of government plans to ease traffic congestion by introducing measures to curb the use of private vehicles, such as electronic road pricing schemes and restricting use of the cross-harbour tunnels. Several leading car retailers have warned shareholders to brace themselves for a crash in profits. But demand for consumer durables is set to improve as the property market picks up.