British house price inflation remained in double-digits in June and prices in the service sector accelerated, according to two separate surveys on Wednesday that reinforced expectations interest rates would go up this week.
Mortgage lender Halifax said house prices rose 0.4 percent in June, taking the annual three-month rate to 10.7 percent.
That was slightly below forecasts but stronger than in May, suggesting the housing market is still weathering the last four interest rate rises reasonably well.
A separate survey by CIPS/NTC showed the booming services sector continued to expand apace last month encouraging firms to put up their prices -- news that will worry Bank of England policymakers as they convene for their monthly meeting.
The central bank is widely expected to raise interest rates for a fifth time in less than a year on Thursday, taking borrowing costs up to 5.75 percent, their highest in 6 years.
Analysts said Wednesday's data merely reinforced that view.
Nothing in the set of data released this morning looks likely to dissuade the MPC from the widely anticipated rate hike tomorrow, said Malcolm Barr, economist at JP Morgan.
The Halifax figures for June were slightly weaker than those published by rival mortgage lender Nationwide last week, but both measures show annual house price inflation remains strong.
And separate figures from the Bank of England showed Britons are continuing to cash in on the rising value of their properties to fund purchases as disposable incomes have been falling.
Housing equity withdrawal totaled 13.2 billion pounds in the first three months of this year, only slightly less than 13.3 billion in the fourth quarter of 2006. And withdrawals as a percentage of post-tax income held steady at 6.1 percent.
HAWKS VS DOVES
The BoE's Monetary Policy Committee was split 5-4 to hold interest rates steady last month, with the hawks arguing that house prices were still rising in most parts of the country.
More dovish members pointed to tentative signs of easing in the property market and household spending and wanted to wait longer to see the effect of the last 100 basis points of monetary tightening.
The high cost of living and subdued wage growth have delivered a double blow to Britons' budgets, squeezing the saving ratio to its smallest slice of disposable income in nearly half a century.
This appears to be having some impact on morale with the Nationwide consumer confidence index falling in June for the first in six months.
Some policymakers are worried that the pain will get much worse if interest rates keep going up.
Britain's new finance minister Alistair Darling expressed concern about the financial burden faced by thousands of Britons whose fixed-rate mortgages are due to expire just as interest rates are expected to go up for a fifth time in a year.
That concern is shared by BoE Deputy Governor Rachel Lomax, who said last week there was a risk of overdoing the tightening.
But her view is unlikely to prevail on Thursday, as only one of her colleagues needs to change their mind to ensure the hawks get their way.
The bottom line is that the MPC still owes us a rate rise, said Andrew Smith, economist at KPMG. Waiting for the new quarterly forecast next month risks the committee falling further behind the curve.