LONDON (Reuters UK) - House price falls eased slightly in June but market conditions remain bleak, while retail sales fell on a year ago, according to surveys on Tuesday.
The figures are the latest to signal that Britain is on the verge of a marked economic slowdown and increased pressure on the Bank of England to cut interest rates despite inflation being at its highest for a decade.
Inflation data, due shortly, are expected to show consumer prices up 3.6 percent year-on-year in June, way above the Bank's 2.0 percent target.
Bank policymaker Andrew Sentance, however, said on Tuesday that the central bank had to consider the slowdown already in train against the fact that people's expectations of price rises had shot up, raising the risk inflation stays higher for longer.
The Royal Institution of Chartered Surveyors said its house price balance -- which measures the balance of property surveyors reporting falls and rises in prices -- rose to -88.0 in June from -92.2 in May, but was still only just above the 30-year low hit in April.
The sales to sales-to-stock ratio, which many economists say is a better guide to prices, fell to a 12-1/2 year low.
"June's RICS housing survey provided more bad news on the state of the housing market, despite a rise in the headline price balance," said Peter Newland, economist at Lehman Bothers.
The figures add to a raft of gloomy housing market surveys which have fuelled fears of a crash and raised expectations that the Bank of England might have to lower interest rates to stave off a recession in the wake of the credit crunch.
The lending squeeze has hit the property market hard as banks get tough on would-be home buyers by giving mortgage loans stricter terms and making them more expensive.
Figures from the Bank of England show two-year fixed-rate mortgages at their most costly in more than eight years.
At the same time, wage rises have remained muted despite higher inflation, squeezing disposable incomes and making it even harder for first-time buyers to get a foot on the property ladder.
Those constraints are now being felt on the high street took, according to figures from the British Retail Consortium showing an annual fall of 0.4 percent in like-for-like sales values last month, following a 1.9 percent leap in May.
"The environment is a hugely challenging one for retailers," said Helen Dickenson, the head of retail at consultants KPMG.
Official retail sales figures have been surprisingly strong this year and, as such, have been the last bastion of hope for the sharply slowing British economy.
If official data start to reflect a indications of weaker consumer activity elsewhere, markets may have to start factoring in a more dovish outlook for rates than inflation-conscious investors have been pricing in so far.
(Editing by Mike Peacock)
