The atmosphere is excellent. The art style, animations, grainy texture filter, the music and sounds, all wonderful. Controls feel pretty good. Diagonal movement could be good. I forgot about left-alt and then was totally stranded, unsure what to do next after I picked up my bag. I had to restart the game to see what I missed. When you hold left or right, hitting up or down doesn't overwrite that. Takes a second to see where the new text starts, wish the most recent text was highlighted somehow. Going in houses is awesome, that's a great idea.
Keep going with this, it's already very cool, and I feel compelled to explore the town more. Do this game justice!