The pre-Christmas shopping surge lost most of its momentum in the January sales, but shop-keepers are hoping for a strong recovery next month.
The CBI said expectations for sales in February, on a year-on-year comparison, were the best recorded by its distributive trades survey since last May.
For the first two weeks of January, 28 per cent of retailers told the survey the volume of their sales was up on the same weeks last year, while 38 per cent said they were down. That left a negative balance of minus 11 per cent - a sharp setback from December's evenly balanced finding, but still better than any other month since last May.
Motor dealers, who missed out on the high street's December recovery, saw a big improvement in January. The adverse balance of minus seven per cent - the majority saying their sales were down year-on-year - fell to seven per cent of the sample from minus 43 per cent in December.
For this month, there is a positive balance of ten per cent looking for an improvement on last February.
Slack sales of vehicles accounted for all of January's setback for the motor trade, with an adverse balance of minus 19 per cent - still less bad than any month last year. Sales of part and accessories recorded a positive balance of 45 per cent, after minus 23 per cent in December.
The CBI's findings coincided yesterday with a report from the Royal Institution of Chartered Surveyors highlighting falling demand for shop space and new inquiries from retailers to lease shops dropping at faster than at any time in the past four years.
Milan Khatri, chief economist at the RICS, said: "The price of goods has come down, cutting profit margins for retailers and in turn putting a squeeze on the retail property market as retailers don't know whether to expand."
At the CBI, John Longworth, a director of Asda and chairman of the distributive trades panel, commented: "As retailers had feared, the s pending surge seen in December was short-lived and not sustained into the New Year.
"However, sales in January were the least negative for eight months, with the exception of Christmas.
"Looking ahead, expectations for growth are the strongest since May, but sales remain heavily dependent on price discounts and promotions."
Shop-keepers continued to cut back the orders they placed with suppliers, but expect little further change this month.
Stock levels fell in January, in line with expectations, after hitting an eight-year peak in December.
Among general retailers, grocers, including supermarkets, did best last month. Those selling goods closely linked to the housing market were down on year-on-year, though less so than last autumn.
Laura Phaff, an economist at the Centre for Economics and Business Research, said it was no surprise that the Christmas spending burst had proved short-lived.
"Part of the reason for January's reduction in sales is low stock levels following a stronger than expected Christmas resulting in less discounted goods compared to previous years," she said.
Richard Ratner, of broker Seymour Pierce, said: "After a brief respite over Christmas, we believe that 2006 will be at least as difficult as 2005 for general retailers."