With consumer confidence wavering, market research firm Mintel has predicted that sales this Christmas will be considerably slower than last year.

Mintel said that it expects retail sales to increase by just 1% over December 2005. Last year, Christmas sales hit an all-time high and while Mintel anticipates similar spending levels, such marginal year-on-year growth could be a cause for concern among retailers.

"With evidence pointing to a more cautious consumer, especially after the second interest rate rise earlier this month, there is every possibility that consumers will start to reign in their spending even before Christmas. In addition, what growth there is on December 2005 retail sales is likely to be shared mainly amongst the likes of Tesco, Sainsbury's and M&S, who are all doing very well right now, leaving little advantage for the others to enjoy," commented Richard Perks, director of retail research at Mintel.

Meanwhile, Mintel suggested, fewer consumers plan to hold money back for the January sales - with 26% of people planning to hold out for New Year deals, compared to 40% in 2001.

Internet shopping is also set to play a greater role in shopping this Christmas, Mintel found, with two in every five adults saying they will use it and 17% saying it is their preferred method of shopping.

"With the popularity of the Internet clear for all to see, it is now more important than ever that high street retailers make their brands available online as well, otherwise they will lose share of retail sales," Perks explained.