An indicator of British house sales dropped to a record low and retailers are suffering their worst summer in three years, said reports released Tuesday - more evidence that the country is falling into a recession. On Tuesday morning, the Bank of England looked more helpless than ever to stop it. Within hours of the housing and retail spending data being released, the government announced that the consumer price inflation rate had leapt to 4.4 percent in July, as food and fuel prices spiked. That's more than double the government's 2 percent inflation target, and higher than economists were expecting. The surging inflation makes it difficult for Bank of England governor Mervyn King to lower official interest rates from the current 5 percent. Although rate cuts would boost consumer spending on everything from clothes to houses and help remedy the falling figures, they would also likely spur inflation even higher. “This is a really disturbing set of data that will not go down at all well at the Bank of England,” said Howard Archer, chief European economist at Global Insight. In a sign that Britons are losing hope that the economy will rebound quickly or be saved by the bank, house sellers are dropping their asking prices, the Royal Institute of Chartered Surveyors said in a report published Tuesday. “This month, surveyors report that realism has returned to the market with many sellers dropping asking prices to more realistic levels,” said the report, which revealed that house prices fell 0.7 percent in June from a month earlier. The average number of completed property sales per surveyor in the three months to July plummeted 40 percent year-on-year to 14.4 - the lowest figure the institute has ever recorded in its 30-year history. Halifax, Britain's biggest mortgage lender, reported earlier that house prices fell by 1.7 percent in July and were 8.8 percent lower than a year earlier - wiping out two years of gains. “The lack of mortgage finance has brought the housing market to a virtual standstill with first-time buyers rapidly becoming an endangered species,” Institute spokesman Ian Perry said. At the same time, British retail sales fell 0.9 percent on a like-for-like basis in July compared to the same month last year, according to a survey published Tuesday by the British Retail Consortium, as higher living costs and falling house prices caused Britons to close their wallets. Sales are now the worst the BRC has recorded since summer 2005.
