According to the report, the growth in the health and beauty sector, that has been strong throughout the year, experienced a sharp slow down in the run up to Christmas, rather than the expected increase.
This is particularly worrying for a sector that relies on pre-Christmas sales to boost the yearly performance, as cosmetics and fragrances are usually favourite gift ideas.
"The usual last-minute pre-Christmas boost for fragrances and gift sets failed to offset slower demand elsewhere" said the report.
Despite these disappointing results the health and beauty sector was best of a bad bunch in what has been the worst Christmas for retailers since 2004.
The worst affected were big purchase items such as furniture and floor coverings, whilst clothing and footwear sales also fell in December.
Christmas trading across all sectors was disappointing according to the consortium, with like-for-like sales increasing by only 0.3 per cent on the comparable time last year, compared to an increase of 2.5 per cent from December 2005-2006.
"This result is somewhat worse than we expected and points to a very challenging first half for 2008," said Kevin Hawkins, the director general of the BRC.
In view of the results the Consortium are calling on the Bank of England to cut interest rates by a half-point: "Given that the full effects of the Bank's previous increases in interest rates have yet to be felt by many households, retailers and manufacturers alike need a rate cut now - preferably a full half-point" said Hawkins.
Helen Dickinson, the head of retail at KPMG (the survey sponsor) called sales growth weak, noting significant differences in sector performance.
In addition, she noted the uneven pattern of sales saying that "in the lead-up to Christmas there were huge daily swings as shoppers replaced even spending patterns with a smaller number of bargain-hunting 'big swoops'".
Similarly, preliminary reports of Christmas trading elsewhere in Europe have not been positive.
According to the Bloomberg Purchase Managers Index (PMI) spending is continuing to decline across countries in the Euro zone, registering an overall index of 46.
Any figure below the 50 mark on the index is considered to represent a decline in consumer spend.
NTC Economics, which compiles the PMI for Bloomberg, said that retailers in Europe's biggest economy, Germany, reported the slowest sales, with an index of 44 for December, while Italy registered 44.7.
The Euro Zone's other leading economy, France, reported the best figure, with a PMI of 49.1, a figure that had rebounded after the national transport strikes that slowed the economy during November.
