LONDON (Reuters) - Britain's housing market is turning down fast and retail sales are falling, surveys showed yesterday, in another sign that interest rates will need to fall further this year to shore up the economy.

The weak figures add to mounting pressure on Prime Minister Gordon Brown, whose first year in power has been tarnished by the failure of a high street bank and a raft of other bad economic news as a global credit crunch hits households.

Inflation numbers showing no acceleration in price growth in March gave some relief, although there is a real risk that the let-up will prove temporary as oil and food prices soar.

"The housing market is the key weak point of the UK economy and is likely to lead to wider weakness in the consumer, putting further pressure on the Bank of England to cut rates," said Dominic Bryant, BNP Paribas economist. "We would not rule out a May move."

House prices are falling across Britain at their steepest rate in three decades, a survey from the Royal Institute of Chartered Surveyors indicated yesterday.

That added to figures last week from Britain's largest mortgage lender Halifax showing house prices fell in March at their sharpest since the early 1990s recession.

The BoE cut rates last week to five percent, but the credit crunch has made banks reluctant to lend to each other and forced lenders to toughen up mortgage deals — meaning falls in official rates are not passed on to would-be house buyers.

The government is meeting banks and mortgage lenders to encourage them to pass on lower borrowing costs as there is now plenty of evidence that market turmoil is hurting consumers.

Like-for-like sales in British shops fell for the first time in two years and at the quickest rate in almost three years last month, according to the British Retail Consortium.

"The survey strongly suggests that consumer spending is now starting to falter markedly in the face of mounting headwinds," said Howard Archer, an economist at Global Insight.