LONDON (Reuters) — A surge in retail sales and an unexpectedly big rise in British mortgage lending suggest three interest rate hikes since August have failed to curb consumer spending and make another rise look all the more imminent.Data released yesterday showed spending remained strong despite the biggest fall in take home pay since 1999.

The Bank of England said mortgage lending rose more than $10 billion ($20.1 billion) in February versus forecasts of 9.4 billion. Mortgage approvals held steady at 119,000 when analysts had expected a fall.

A survey by the Confederation of British Industry showed retail sales volumes rose at their fastest pace in more than two years this month — twice as fast as expected.

“Despite weak income growth, high debt levels and increasing household borrowing rates, consumers continue to spend,” said George Buckley, chief UK economist at Deutsche Bank.

The BoE has raised borrowing costs by 75 basis points since last August to try to curb inflation, which has been above its 2 percent target for the best part of a year.

Financial markets are fully pricing in another quarter point increase to 5.50 percent by the summer and analysts said yesterday’s data increased the chances that move could come as early as next week, and if not then in May.

“The bank will be concerned that current robust demand will boost retailers’ confidence in their pricing power,” said Howard Archer of Global Insight.

Bank policymakers this week highlighted the confidence of firms in raising prices as a particular worry given that energy costs are falling and wage rises have been subdued.

But the fact that spending has remained strong despite a fall in real disposable incomes, according to official data this week, has raised questions over how long consumers will be able to keep spending with the same gusto.

A fall in the saving ratio to 3.7 percent, its lowest in two years, indicated Britons were eating into savings to finance purchases. Analysts believe consumers are also borrowing against their homes while being more cautious about unsecured debt.

The CBI reckoned the housing market was the driving force behind much of the rise in retail sales in March as Britons spent money on furnishing their homes.

House prices have been rising fast in Britain for more than a year but there are signs that demand for property is starting to cool as borrowing costs kick in. Growing numbers of would-be buyers are also being priced out of the market.

Indeed, figures from the Nationwide building society this week showed house price inflation eased this month and BoE Governor Mervyn King saw signs the market was starting to slow.

“Although monetary policymakers have noted tentative signs of a slowdown in the housing market, the recent data are unlikely to prove an obstacle to a further rate rise,” said Alan Castle, economist at Lehman Brothers.