A cold snap and early Christmas clearances meant sales over the festive period were better than feared, the British Retail Consortium has said.
Trading was boosted by early Christmas sales.
There had been no "bonanza" but takings in December were up 2.5% compared with a year ago, the BRC added.
This came after earlier predictions that shops faced their worst festive season in 25 years.
Sales were buoyed by a last-minute rush in the week before Christmas and demand for electronic goods and champagne.
The onset of cold weather later in the month also boosted demand for clothing and footwear, which had suffered from a mild early December.
In electronics, flat screen televisions and laptops remained popular but competition from online downloads hit sales of CDs, the BRC said.
The fears of a weak Christmas trading period came after November's like-for-like sales were just 0.5%.
But while the crucial December sales were below the 2.6% growth seen in 2005, they were a "long way from the disaster predicted", BRC director general Kevin Hawkins said.
An earlier study by retail research group Footfall found that the number of shoppers visiting the High Street in the week before Christmas was down 8%, while the dip for the week after was 6.8%.
The BRC study pointed to strong food and drink sales, with promotional offers on wines and champagne attracting customers.
Total retail sales for 2006 were up 4.4% on the year before. Like-for-like sales in the last three months of the year were up 1.9% against the same period in 2005.
Among those firms to already report Christmas sales, John Lewis saw a 10.8% rise in the five weeks to 6 January, after three record weeks when sales exceeded £90m.
Rival department store also House of Fraser reported a strong performance, with same-store sales rising 7.3% in the four weeks to 30 December, compared with a year earlier.
But not all stores have enjoyed a strong Christmas. Photographic retailer Jessops said sales in the 6 weeks to 5 January were 6.9% lower on a year ago following weak demand for digital compact cameras and supply problems with SLR models.