Retail sales rebounded strongly in December as shops slashed prices to lure in pre-Christmas shoppers, providing a rare note of relief after a grim 2011, official data showed on Friday.

The figures raise hopes that the economy as a whole avoided contracting in the last three months of 2011, though there is little evidence that the strong sales will persist into 2012.

The Office for National Statistics said retail sales volumes rose 0.6 percent on the month to give an annual rise of 2.6 percent - broadly in line with economists' forecasts for monthly and annual rises of 0.6 percent and 2.4 percent respectively.

This was the best annual performance since January, following a 0.5 percent month-on-month fall in November. Sales in the three months to December were 1.1 percent up on Q3, the biggest increase since August 2010.

However, economists have warned that December's strong performance may prove a flash in the pan, driven by earlier-than-usual discounting by retailers, Christmas Eve falling on a Saturday and a favourable annual comparison with December 2010, when heavy snow disrupted trade.

Thursday's Nationwide consumer confidence survey showed the second-lowest reading in the survey's 7-year history, and discount clothing chain Peacocks became the latest high street firm to call in administrators on Wednesday.

Companies' Christmas trading statements have been mixed. High street electronics and entertainment retailers such as Dixons, Comet, HMV and Game have reported sharp annual falls in sales, as has Britain's biggest supermarket chain Tesco.

The retail sales deflator - a measure of inflation used in Friday's data - sank to 2.4 percent from 3.6 percent, its lowest since August 2010.

The retail sales figures confirmed that clothing stores were one of the main drivers of growth, with other areas including food and 'other stores'.

Economists remain concerned that retail sales will weaken in the early part of 2012, due to still-high inflation, fiscal austerity and rising unemployment.

However, some retailers see grounds for optimism, due to lower raw material costs and Bank of England forecasts that inflation will fall sharply from its current level of 4.2 percent.

The finance director of Associated British Foods - which owns discount clothing chain Primark as well as being one of the world's largest sugar producers - told Reuters on Thursday that inflation pressures were easing.

And on Friday, upmarket department and supermarket chain John Lewis reported a 9.9 percent annual rise in sales in the week to January 14.

(Reporting by David Milliken an Sven Egenter)