Shares of Dollar General Corp., the largest U.S. dollar-store chain, fell the most in 18 months on Tuesday after the company said it will match rivals’ price cuts to retain customers that analysts anticipate will spend more cautiously next year.

The shares dropped 7.8 percent to $42.94 at the close in New York, the biggest one-day decline since June 1, 2011. Smaller rivals Family Dollar Stores Inc. and Dollar Tree Inc. fell 8.4 percent and 3.7 percent, respectively.

Dollar General, based in Goodlettsville, Tennessee, will increase spending on promotions to spur sales of other popular items such as coffee and cereal to consumers, Chief Executive Officer Richard Dreiling said Tuesday on a conference call. Americans face the possibility of more than $600 billion in tax increases and government spending cuts next year.

“Every time you turn on the television, there’s a bunch of guys in a suit who are frowning, telling you that the world is going over a fiscal cliff,” Dreiling said. “The customer is fatigued, they’re tired, they’re scared.”

Dollar General was downgraded to neutral, the equivalent of a hold recommendation, from buy by Denise Chai, an analyst at Bank of America Merrill Lynch, citing pressure on profit margins due to increased competition.

Matthew Boss, an analyst at JPMorgan Chase & Co. in New York, cut Matthews, North Carolina-based Family Dollar to the equivalent of hold from buy.