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Last Updated: Monday, 12 December 2005, 11:13 GMT
Gas prices surge for businesses
Gas pipe
UK gas supplies have been lower than usual
Business gas prices surged 44.9% in November, the biggest monthly rise since records began in 1991, the Office for National Statistics (ONS) has said.

The figure came in the ONS's latest survey of producer prices, and follow reports that businesses could face gas shortages this winter.

UK gas prices have surged in recent months due to reduced supplies coming through the main pipeline from Europe.

Firms have already expressed supply fears should the UK have a cold winter.

However, domestic supplies are not expected to be affected.

New pipeline

A recent study said UK gas supplies were lower than usual because gas firms on the continent were diverting supplies to Spain and the US where prices were even higher and they could make more money.

Wood Mackenzie gas analyst Frank Harris said operators could make up to $14m (8m) more per cargo by selling to the US rather than the UK.

With the UK's own North Sea gas supplies dwindling, a new pipeline is being constructed to bring gas into the UK from Norway, but this will not be completed until next winter.

Two liquefied natural gas terminals are being built in Milford Haven but they will not be ready until 2007 and 2008.

Interest rates

The ONS also revealed on Monday that UK factory gate inflation slowed more than expected in November to its lowest rate since April 2004.

The price of goods leaving factories fell by 0.2% last month, reducing the annual growth rate to 2.3%.

Its findings are likely to support the general opinion of economists that the headline or general inflation rate will also continue to ease.

It also gives the Bank of England room to cut interest rates early next year.

The latest annual growth rate figure is worse than analysts' had expected.

Experts had predicted 2.5% for November after 2.6% in October.

The ONS said the fall in factory output prices was driven by a 3.3% monthly drop in petrol prices, the biggest decline since May 2003.

Yet, input prices unexpectedly rose in November by 1.4%, increasing the annual rate to 12.5%, due to the substantial rise in gas prices.

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