Bad weather and a rise in prices have been blamed for the results, which leave volume sales unchanged from 2009.
Value sales have however seen a rise of 2 per cent.
The figures, which reflect the last month for the rise in VAT, show annual food sales down 3.4 per cent the worst fall since records began in 1988.
Fuel sales also fell, by 5.9 per cent for December; suggesting that snowy conditions meant many people left cars at home.
The Met Office has confirmed December 2010 as the coldest on record.
Hetal Mehta at Daiwa Capital Markets described the results, announced by the Office of National Statistics this morning, as "hugely disappointing",
"Of course, some fall in retail sales was to be expected given the disruption caused by the snow, but the extent of the fall suggests there is more to it than just poor weather deterring consumers."
The British Chambers of Commerce has urged the Bank of England to continue holding off an interest rates increase.
Arguing that disposable incomes will continue to be squeezed in the coming months, chief economist for the BCC David Kern stated "In this instance, it would be wrong to raise interest rates until the initial impact of the austerity package is absorbed."