Retail sales increased 0.3% in volume and 0.7% in value in December compared to last year, official statistics have shown.

The Office for National Statistics said that sales volumes have continued to show upward movements since August 2011, but that the strength of December’s growth was weaker than in previous months.

The 0.3% year-on-year increase in the quantity bought was the lowest year-on-year growth for the month of December since 1998, with the exception of December 2010, when retail sales fell sharply as a result of harsh winter weather.

The estimated weekly spend across all retailing was £8.5bn in December 2012 compared with £8.4bn in December 2011.

The amount spent online accounted for 10.6% of all retail spending excluding fuel, down from 10.9% last year.

Department stores enjoyed 36.1% year-on-year growth online with fashion up 26.3%.

In the food sector, which has the lowest penetration of online spend of any category, 3.2% of spending was online, down from 3.3% a year earlier.

Predominantly food stores in December 2012 saw an increase in the amount spent of 1.7% compared with December 2011. Food prices increased 3% and the quantity bought decreased by 1% over the same period. 

Peter Saville, partner at advisory and restructuring firm Zolfo Cooper said: “Today’s figures show a disappointing end to a tough year for many retailers. While 2013 appears to be heading in a similar direction, with the likes of Jessops, HMV and Blockbuster being the first to fall victim, the fact that many, including John Lewis, Dixons and Asos, are still performing well means that all is not lost.

“In 2013 it is imperative that companies keep pace with changing consumer habits and continue to develop their in-store experience, quality and convenience as well as providing a comprehensive service online.”

British Retail Consortium Director General, Helen Dickinson, said: “This confirms our own findings that it was a cautious Christmas for many of us.  With many household budgets still feeling the squeeze and no signs of economic challenges receding any time soon, this led to a respectable rather than spectacular result during the most crucial trading period of the year.

“As with our own figures, the internet was the standout performer – our own figures would have shown subzero growth in non-food sales if it hadn’t been for online’s significant year on year rise.”

She added: “Even food, usually dependable at this time of year, showed a slowdown in growth.   This suggests that relentlessly tough times led many to ‘trade down’ to cheaper and own-label brands, but also that many economised so that they had more money to spend treating family and friends with nice presents.”