The boost in consumer demand follows seven Bank of England interest rate cuts this year, pushing the rate to a 37-year low of 4%.

It has been a difficult year since September 11 but things have really picked up for Christmas

Jenners, Edinburgh

Sharp price cuts in stores have also helped to drive inflation to its lowest for more than 40 years, with retailers benefiting from a spending surge particularly in recent weeks.

John Lewis said it had recorded its biggest ever weekly turnover in the run-up to Christmas, at �72m.

Sales at its 26 department stores were also up 4.4% on last year for the week ending 8 December, according to merchandise director Nigel Wreford-Brown.

He also believed shoppers had more money to spend in stores this year because fewer were going on holiday since September 11.

'Boom'

"If this Christmas continues the normal pattern for this time of year, we should beat that this week and the week after," he said.

"I am a bit nervous about using the word 'booming', but it's going pretty well considering the stock market is bumping along and the housing market has flattened out."

Stores have had a bumper few weeks

Sales of clothing, household goods and furniture have been particularly buoyant in the run-up to Christmas, said retailers.

Martin Barnett, spokesman for the Marylebone Retailers Association, said: "Normally you just can't sell furniture at this time of year but we have been doing incredibly well.

"Everyone put their prices down because they thought it was going to be tough but in fact people have more money to spend."

House of Fraser on Oxford Street said its sales were 20% up on this time last year.

Senior Manager Nick Saul said: "I don't think it's anywhere near as bad as everybody predicted."

The MetroCentre in Gateshead, Tyne and Wear, said all 300 plus shops had reported a rise in trading figures.

Marketing manager Karen Carr said: "Seasonal gifts are selling very well, as are clothes and other items. In the last week of November, one of the department stores had the best sale in 15 years."

Prized toy

A queue formed at Jenners' Edinburgh store from 6am on Saturday morning to secure one of the most sought after Christmas toys.

Sales controller James Bradbury said: "We received a batch of 40 Harry Potter Lego castles and trains yesterday afternoon and our customers could not believe their luck."

Average Christmas spending by region

London �386 South �362 Anglia/Midlands �362 Wales/West/South West �412 Yorkshire/North East �383 North West �364 Scotland �385 Source: Mintel

He added up to 90,000 shoppers were expected to pass through the store on Saturday, while projected sales this Christmas should be up 4% on last year, he added.

On the build-up to the festive period, Mr Bradbury said: "It has been very buoyant indeed.

"It has been a difficult year since September 11 but things have really picked up for Christmas and people seem to be gearing up to enjoy themselves".

The healthy sales figures reinforce findings from a survey out on Friday that show one third of consumers plan to splash out more this Christmas than they did last year.

Market analysts Mintel found that just 14% of people interviewed were less inclined to spend as much on Christmas shopping due to current global events - and the attacks on 11 September.