Just Four weeks ahead of Christmas, and a report published by the BRC and Nielsen said total sales of Christmas goods would rise 5% against last year.
However the figure includes a substantial increase in selling space over the last 12 months.
On a like-for-like basis growth could be less than 3% with much of the growth coming from discounting which will further squeeze margins, the report suggested.
This year, each person will spend an average of £435 on Christmas gifts, 12% more than last year. The most popular gifts will be clothes, books, films and music, with cosmetics, fragrances and vouchers also big sellers.
Director general of the BRC Kevin Hawkins said the figures should provide retailers with a boost following a tough year, but added that the upbeat mood would not last for long. "These figures will be encouraging for many retailers. However, with the recent slump in consumer confidence and falling spending power, growth this year is likely to be driven by discounting. If retailers do see a boom this Christmas, it will be followed by a slump in spending, as consumers really start to feel the pinch and tighten their belts," Hawkins said.