The CBI distributive trades survey, which covers the first two weeks of December, found more retailers had experienced sales growth than those that suffered a fall.
The balance of +9pc of companies that said sales rose on last December was significantly better than the -6pc that economists had expected and a marked improvement on the -19pc in November.
Some 41pc of retailers said sales increased, while 32pc reported a decline.
Judith McKenna, chairman of the CBI distributive trades panel and ASDA’s chief financial officer, said: “Early discounting helped retailers add a little extra sparkle to their sales in December, although the reprieve appears to only be temporary as they don’t expect sales to continue to grow into January.”
Online retailers enjoyed the sharpest rise in sales, almost doubling their sales. Grocers and recreational retailers had a strong month, at +52pc and +44pc respectively. Departments stores have been treading water in December, the survey found.
Adding to the sense of optimism, the report showed a large upswing in orders placed with suppliers, which rose to -4pc from -25pc in November. Sales of big ticket items collapsed, however, with all retailers reporting a drop in fridges, cookers and similar white goods.
Annalisa Piazza of Newedge Strategy said: “The outcome is much more solid than expected. Generous retail discounts and supermarket war prices for food might have helped the solid rebound in retail activity right before Christmas.”
The upbeat figures came as Nationwide Building Society reported that consumer confidence rebounded last month from a record low, although the public remained cautious about the future. Its index of sentiment increased to 40 from 36 in October, which was the lowest since the survey began in 2004.
However, the improved December retail figures masked concerns about future months. The CBI reported that the measure of expected demand for next month was at -18pc.
Ms Piazza said: “The picture looks less gloomy than in the past few months but we wouldn’t read too much out of a one month reading. UK households remain concerned about their future financial situation and disposable income remains under pressure with rising unemployment.
“Looking ahead, the picture for retail sales is less encouraging... signalling that the majority of respondents still see a negative outlook in the near term.”
