* Euro zone service sector growth eases
* Firms pass on rising costs to customers
* Indian, Chinese services PMI bounce higher
* U.S. PMI seen higher
By Jonathan Cable
LONDON, May 4 (Reuters) - Euro zone service sector companies eased off the accelerator slightly last month but ratcheted up prices, while Indian firms also turned up the heat, according to the latest business surveys to show inflation is on the rise.
Businesses in the United States are also expected to have performed strongly, while Chinese services-based companies grew at their fastest pace in 11 months in April, despite a raft of policy tightening measures imposed in recent months by Beijing.
But growth is coming at a cost, with output price indexes in closely-watched purchasing managers' surveys hitting new highs across the world as firms increasingly pass rising costs from soaring commodity and energy prices on to customers.
"The PMI confirms that for now at least it is still consistent with pretty healthy growth in the euro zone. They (prices) have been at high levels for some time now and that will be of a concern," said Ben May at Capital Economics. The Markit Eurozone Services Purchasing Managers' Index, which measures changes in the activity of euro zone companies ranging from banks to restaurants, slipped to 56.7 in April from the previous month's near 4-year high of 57.2.
That marked its 20th month in a row above the 50 mark that divides growth from contraction.
Expansion was again dominated by Germany and France, which masked virtual stagnation in Spain and slowing growth in Italy and Ireland.
Separately, euro zone retail sales fell sharply in March, pointing to weaker household demand, as soaring prices and harsh austerity measures weighed on consumers' minds.
The biggest monthly decline in sales was in Portugal, where the government secured a 78 billion euros bailout on Tuesday but will be expected to cut debt sharply in return.
Data due next week is expected to show the 17-nation bloc's economy grew 0.5 percent in the first quarter, a modest step up from the lacklustre 0.3 percent expansion seen in the last months of 2010.
Markit said that if sustained, the latest PMI figures were consistent with quarterly growth of around 0.8 percent in the second quarter of the year. Data later in the day is expected to show the U.S. services sector, which accounts for 80 percent of the world's largest economy, expanded slightly faster last month than in March.
The Federal Reserve said last week the economy was clawing back from its deep recession at a "moderate pace" and showed it was in no rush to change its ultra-loose policy, despite some signs of inflation pressures building.
PRICE PRESSURES
The euro zone's output price index rose to 53.0 last month, its highest level since July 2008 and up from March's 52.3, as firms grew increasingly confident about passing on soaring input costs to customers.
The figures will bolster those policymakers at the European Central Bank who believe the strong recovery in Europe's core economies calls for more interest rate rises before inflation becomes entrenched, even while weaker euro zone states remain engulfed in the debt crisis.
Data released on Friday showed consumer prices in the bloc rose 2.8 percent year-on-year in April, up from March's 2.7 percent and well above the ECB's two percent target ceiling.
The ECB holds a rate-setting meeting on Thursday, having raised rates for the first time in two years last month. The next tightening is expected in June or July.
"They need to hike because of the growth of the core countries in Europe like Germany. They can't sustain this very low interest rate and emergency measures," said Jan Dubsky at RBS.
Earlier on Wednesday, a comparable survey showed India's services sector gained momentum in April, with strong growth in new business orders despite stubbornly high inflation and expectations of further interest rate increases.
The Reserve Bank of India raised rates for the ninth time since March 2010 on Tuesday in a bid to rein in stubborn inflation that rose to nearly 9 percent in March, above the central bank's target of 8 percent.
China's PMI for its services sector, published on Tuesday, rose to an 11-month high of 62.5 in April from 60.2 in March. (Additional reporting by Jason George in Bangalore, editing by Mike Peacock)