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* UK retail sales cool slightly in Dec, despite Christmassurge
* Retailers expect prices to spiral higher in next fewmonths
* EC survey shows record increase in shop price inflationgauge (adds European Commission figures)
By James Davey and Andy Bruce
LONDON, Jan 6 (Reuters) - A spending spree by Britishshoppers in the week before Christmas failed to prevent sales inDecember from falling short of the previous year's level, whileshop prices are expected to surge in 2017, surveys showed onFriday.
Robust growth in consumer spending has been one of the mainfactors sustaining Britain's economy since last June's vote toleave the European Union. But many retailers fear a squeeze onspending as inflation begins to erode real earnings growth in2017.
Monthly surveys from accountancy firm BDO and the EuropeanCommission (EC) showed retail sales slowed in December, with thelatter showing a record jump in retailers' price expectations.
Like-for-like retail sales in December fell 0.1 percentyear-on-year, according to BDO. However, online sales in themonth rose 19 percent year on year, further evidence of a shiftin shopping habits.
"With such a weak base for December 2015 (when sales fell5.3 percent) any further decline can only be seen as a poorresult for retailers," said Sophie Michael, head of retail andwholesale at BDO.
"Coming at a critical juncture, this fourth negativeDecember in succession highlights the magnitude of the challengethat lies ahead for 2017, when consumers will more keenly feelthe bite of inflation and the weaker pound," she added.
The pound is still down around 12 percent on atrade-weighted basis since the vote for Brexit on June 23. Bankof England chief economist Andy Haldane said on Thursday theeffect of sterling's slump was starting to trickle into highershop prices.
The EC's gauge of UK retailers' price expectations for thecoming months more than doubled between November and December, arecord increase to levels nearing the all-time highs reached in2011, the last time consumer price inflation topped 5 percent.
The mixture of burgeoning inflation pressure and strongconsumer spending leaves the Bank of England with a balancingact between trying to keep prices under control while supportingthe economy.
BDO said that in the week leading up to Christmas Day salesincreased 11.7 percent year on year - the largest weekly growthfigure for the whole of 2016. However, the outcome partlyreflected Christmas Day falling on a Sunday.
On Wednesday clothing retailer Next, the first majorBritish retailer to give an update on Christmas trading, cut itsprofit forecast for the current financial year and warned of afurther decline in 2017-18.
The British Retail Consortium is scheduled to publishDecember sales data on Jan. 10. Official data for the month ispublished on Jan. 20.
Next week will also see a raft of Christmas trading updates,including from supermarkets Morrisons, Sainsbury's and Tesco and from Marks & Spencer, Debenhams and ASOS.
(Graphic by Andy Bruce, Editing by Keith Weir and Adrian Croft)
