By Sumeet Desai and Christina Fincher

LONDON (Reuters) - Inflation shot up in July to more than twice the central bank's target, dousing expectations of interest rate cuts any time soon despite new evidence of sliding house prices and waning consumer demand.

The 4.4 percent annual inflation rate was a record for the 11-year-old series, as was the 0.6 percentage point jump in the price measure from June which took financial markets by surprise. Economists had forecast a rise to 4.1 percent.

The surge above the Bank of England's 2.0 percent inflation target, driven by rocketing food and fuel prices, would normally argue for a rise in official interest rates. But other data on Tuesday highlighted a rapid fall in house prices and weakening consumer spending that a point to an economy teetering on the edge of its first recession since the early 1990s.

Bank of England policymakers had seen the inflation figures at their meeting last week when they left rates unchanged at 5.0 percent. Their new quarterly forecasts due on Wednesday are almost certain to show a much higher near-term inflation profile -- although their forecast for economic growth is likely to be much lower.

"There is little chance the Monetary Policy Committee will cut rates in the next few months, and indeed, there remains a near-term risk that the MPC will hike rates if inflation expectations surge higher again," said Michael Saunders, economist at Citigroup.

Yet even after the CPI data, interest rates futures markets attached around a 15 percent chance the Bank will cut rates to 4.75 percent in December, and a more than 50-50 probability rates will be cut in February.

Sterling rallied, sank, then recovered a touch, reflecting the conflicting pressures on the central bank. Sterling was trading around $1.905 and 78.35 pence per euro at 12:25 p.m.

EGGS, BACON, SAUSAGE AND TOAST