The value of sales rose 6.5 per cent, up from 3.5 per cent in the 12 months to November. The volume of sales picked up too, with their year-on-year growth climbing to 3.8 per cent from 2.6 per cent in December.
Last month was the first time since the economy began to emerge from recession that a gain in retail sales volumes was not achieved through price cuts - although some of the biggest increases in sales volumes came in sectors which saw relatively small price rises. For example, the price of household goods increased 0.6 per cent last month, but sales volumes rose only 0.2 per cent. The biggest monthly advances came in clothing and footwear and the mixed retail category (mainly department stores), both up1.9 per cent.
The British Retail Consortium said the improvement last month was encouraging, with a late buying spree before Christmas. The new year had started badly, however. Some analysts cautioned that the seasonal adjustment of December sales figures was tricky, and there could be a reversal this month.
Ian Shepherdson, an economist at HSBC Markets, said the breakdown of the figures showed big stores and out-of-town centres were doing better than specialist high street shops. Sales in the mixed retail category rose 0.7 per cent in October-December compared with the previous quarter, while sales in the other non-food category - shops such as high street jewellers and chemists - fell 0.9 per cent.
Separate figures on car production published yesterday suggested British consumers were still not flocking to buy cars. Production rose 1.3 per cent in the final quarter of last year. Production allocated for export rose 7.3 per cent, but home productionfell 2.8 per cent.
The dollar was buffeted in the currency markets yesterday after the publication of figures showing inflation pressures and a trade deficit that reached $10.53bn in November.
By noon in New York the US currency had fallen below DM1.52, although post-earthquake concerns about Japan helped it against the yen.
The Dow Jones index was off more than 40 points by early afternoon, with bank shares and Japanese ADRs weakest.
The inflation concerns were prompted by a Philadelphia Federal Reserve Bank survey that showed a rise in prices paid and prices charged by manufacturers in its area.
The trade gap widened by $430m during the month.
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