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Retail sales climbed 0.5 percent in December to $415.7 billion from the previous month and 4.7 percent above December 2011, seasonally adjusted. That beat the median of forecasters surveyed by Bloomberg News, who expected a .02 percent rise for the key shopping month.

December's increase is slightly better than the 0.4 percent increase in November.

Car sales including auto parts led the rise in retail sales with a 1.6 percent increase. The U.S. vehicle industry had its strongest sales in 2012 in five years, the AP reported.

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Retailers had previously reported a strong holiday shopping season, driven by last-minute shoppers.

The holiday shopping season is especially important for the retail industry, with some stores making as much as 40 percent of sales in that period.

Scott Brown, chief economist for Raymond James, said the headline number was restrained a bit by higher gasoline prices. He said the retail report showed the "same moderate consumer spending growth."

Economists also look to retail sales as a clue to U.S. consumption, which is the largest component of GDP.

"However, the report doesn't tell us anything about consumer spending in early 2013," he said. "The payroll tax increase is going to be a major constraint on consumer spending growth."

Jim O'Sullivan, chief U.S. economist for High Frequency Economics, estimates that retail sales data are consistent with total real consumption rising at a 2.1 percent annual rate in the fourth quarter, "which is fairly sluggish" although slightly higher than the 1.6 percent pace in the third quarter.