This survey, from the British Retail Consortium, follows a report last month from the Confederation of British Industry showing UK retail sales volumes growing at their fastest annual pace for two years in early December.

It adds to the likelihood that the Bank of England's Monetary Policy Committee, although considered almost certain to hold base rates on Thursday, will follow last August and November's quarter-point increases with another rise from 5-per cent to 5.25-per cent when it recasts its quarterly inf lation projections next month.

The BRC said clothing and footwear sales picked up last month, helped by colder days just before Christmas. Premium skincare, fragrance and cosmetics were "very popular".

It added that food sales remained strong.

Growth in total sales value gives a better idea of overall consumer spending because, as opposed to the like-for-like measure, it includes the beneficial impact of store openings and extensions.

Even on a like-for-like basis, a better measure of how the actual retailers are faring, the BRC said sales were up an annual 2.5-per cent. This was almost in line with annual like-for-like growth of 2.6-per cent in December 2005 - which had been the strongest sales increase in any month that year.

The BRC, which has in the past appeared to play down sales growth, is uncharacteristically upbeat this time about what are very solid results.

Kevin Hawkins, its directorgeneral, said: "These results are almost exactly in line with our expectations - which were for like-for-like sales growth similar to last year's out-turn. While some retailers have performed very strongly, the average experience was broadly as we expected - not a bonanza but a long way from the disaster predicted by at least one City luminary."

A BRC spokesman confirmed last night this was a reference to Richard Ratner, high-profile retail analyst at stockbroker Seymour Pierce.

Ratner said in November:

"We now believe that Christmas in 2006 will be worse than 2005, and could be as difficult as, or even softer than, 2004, which was the worst Christmas for 23 years. If the latter is the case, it will make it the worst for 25years." He described a seeming downturn in clothing and footwear sales as "awful".

Ratner appeared to go on the defensive last week by declaring: "We said at the end of November that it was probably likely to be the worst Christmas in 25 years for some of the general retailers. Let us expand upon what we actually said, so that there is no danger of our being either misquoted or misunderstood. We said that we thought that overall sales would be up, but that it was a question as to where they went and the (profit) margin."

Ratner said in November that Marks & Spencer and John Lewis appeared to be doing well, as did food retailers.

John Lewis yesterday confirmed itself as a star of the festive trading period by announcing sales at its department store business, including website and catalogue business, were up 10.8-per cent on a like-for-like annual basis in the five weeks to January 6. Marks & Spencer is expected to announce strong sales figures this morning.

Official UK retail sales figures for December will not be out until January 19. Mervyn King, governor of the Bank of England, warned in January 2005 about not reading too much into one month's retail sales: "We should recognise that the true meaning of the Christmas story will not be revealed until Easter - or possibly much later."

However, a survey last week showed the UK service sector growing at its fastest pace for nearly a decade in December. Mortgage lending is growing at its fastest for three years, according to the Bank of England, with annual UK house price inflation rising to around 10-per cent on surveys from Halifax and Nationwide.

A survey yesterday from Incomes Data Services - putting the median annual rise in wage settlements taking effect in January at 4-per cent - may alarm MPC members who fear higher inf lation could feed in to pay deals.