Local officials said the store was in a camp controlled by an armed militia from the city of Misrata, but the group had left after clashing with residents.
The explosion reportedly happened as residents entered the camp but it is not yet clear what triggered the blast.
Garabulli is about 50km (30 miles) east of Tripoli and 140km west of Misrata.
"The number of casualties is rising and we are working hard to transfer them to nearest hospitals," Mohamed Assayed, a local official, told the Reuters news agency.
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