British inflation edged down last month but house price growth surged in July at the fastest annual pace since in seven years, official data showed yesterday.

Consumer prices rose 1.5 per cent on the year in August, the lowest increase since May, compared with 1.6 per cent in July, the Office for National Statistics said.

Economists taking part in a Reuters poll had expected inflation to fall to 1.5 per cent.Compared with the previous month, the consumer price index in August was up 0.4 percent, the ONS said.

The data are unlikely to shift expectations among economists that the Bank of England will keep interest rates on hold until around the second quarter of next year.

BoE Governor Mark Carney said last week the central bank may start to raise interest rates next spring if the labour market continues to recover from the financial crisis.

Separate data from the ONS showed house prices in Britain rose 11.7 per cent in the year to July. Some other surveys since then have suggested the rapid pace of house price growth has started to cool.

In London, which led house surging house price growth earlier this year, property prices rose 19.1 per cent on the year, down slightly from 19.3 per cent in June.