Figures for January reveal that retailers are beginning to get over their Christmas hang over, as sales proved "marginally weaker" than in 2004.
The figures, published by the Confederation of British Industry (CBI), although going against expectations of a slight rise in activity, did represent a turnaround from dreary sales figures over Christmas.
Government data suggests that the latest festive period was the worst for retailers since 1981.
Three in ten firms reported sales volumes up on a year ago, while 33 per cent claimed they were down. The negative balance of minus three per cent is the weakest January balance since 1999 when it was minus nine.
However, shop owners remained relatively confident, with retailers expecting a small increase in sales in the year to February.
Separate research shows that consumer sentiment is also holding up. Research by GfK Martin Hamblin shows that confidence increased to a score of plus one in January from minus three in December.
An increase in major purchases drove the increase, which was the best score since November 2002, said GfK.
Ian McCafferty, chief economic adviser to the CBI, said the mixed picture post-Christmas would convince the monetary policy chiefs at the Bank of England to freeze interest rates in coming months.
He said: "It is always difficult to judge the underlying trend in the wider economy from activity over the Christmas period, so the Bank of England is likely to want more evidence before changing its stance on interest rates."
Positive figures did show that wholesalers reported unexpectedly robust sales growth over the year to January after a flat month in December.
Sales volumes were rated as being above average for the time of year and expectations are for a further rise in sales in the year to February, especially as some stores extend their sales period.
