Grains and pulses have been removed from their original packing and subdivided into more affordable portions. Above the door is a space where a television used to be, and by his elbow is the Qur'an and his ledger book.

His accounts make grim reading. His customers owe him 5,000 shekels (£613), and he owes his suppliers double that. "I'm already almost closed and I really don't know for how much longer I will continue. Without the shop I could try ironing or driving a taxi. It is in God's hands," he said, pointing to the Qur'an.

As the Palestinian Authority in Ramallah and the Israeli government in Jerusalem prepare for talks in the United States next month, Gaza is excluded from the new rapprochement. Mr Sultan and others like him are facing ruin as a result of Israeli sanctions designed to weaken the Hamas government and punish their supporters.

According to a World Bank report issued last month: "Gaza's economic backbone and private sector vitality risks collapse if the current situation ... continues." The report states that 90% of Gaza's industrial production has ceased and agricultural output has fallen by 50% in 2007.

While the Gazan economy is in free fall, Hamas, the main target of the Israeli sanctions, and its political rival, Fatah, appear to be awash with cash.

There were crowds in the main streets last week surveying lists of names to see if they had been nominated to receive a $100 (£50) gift for Ramadan from either Hamas or Fatah. Hamas was offering the sum to 40,000 people, while Fatah was giving to 65,000.

Both parties, through their respective governments in Gaza and Ramallah, hope to pay their civil servants and security forces in full this month. Hamas says it will pay 16,000 salaries this week, averaging $400 a person, while Fatah will pay around 60,000 - on the understanding that the recipients stay at home and do not work with the Hamas government.

Chris Gunness, a spokesman for the United Nations Relief and Works Agency, the organisation that provides social services for Palestinian refugees, said that the payment of wages in Gaza was having little effect on Gaza's continued economic disintegration. "There is an increasing sense of isolation and desperation which is likely to lead to a radicalisation of the population when there seems to be momentum in the peace process generally. As ever the most vulnerable sectors of society are the hardest hit by the sanctions."

The Israeli sanctions are affecting every level of Gazan society. Farmers have been particularly hard hit as they have been barred from exporting their products and denied pesticides and fertiliser by Israel, which makes it impossible to plant for next year.

Spare parts for water pumps and other equipment are also barred.

The army recently banned the import of hearing aid batteries for Gaza's school for the deaf on the grounds that they could be used to make bombs.

It is reducing the amount of food going into Gaza every week as it tries to exert more pressure on the population to bring about political change.

The Israeli army is micro-managing the sanctions to ensure that it cannot be accused of starving Gaza. In a daily communique to international organisations, the army proclaims: "No Humanitarian Crisis in the Gaza Strip - No Hunger in the Palestinian Territories", before it lists the number of days of food it estimates that Gaza has.

But dry statistics hide thousands of stories of misery.

"Normally at this time, before Eid [the festival that marks the end of Ramadan], my shelves would be full of food and presents, but no one has any money to buy anything other than the bare essentials," said Mr Sultan. He has already sold his car and the furniture in his home to survive. He used the $100 gift from Hamas to buy more stock.

But there are others who are even worse off. Nabil Jaber Saleem, 45, who suffers from diabetes, enters the store. He used to work in Israel. He says his 10 children are still hungry after breaking their fast with a meal of tomatoes, olives, yogurt and tea. "It's a desperate situation. I don't even have a shekel to spend on food," he said.

Last night he told them that he can no longer afford to pay their school and university fees. "I have told my children they would be better getting married or getting jobs because there is no money for education."