Budget 2011: Beer and cigarette prices to jump

The price of a pint of beer is set to rise by up to 10p, while the Wine and Spirit Trade Association warned inflation-busting tax increases on alcohol will lead to consumers will paying 15p more for a bottle of wine and 54p more for a bottle of spirits from Monday.

Duty on beers, spirits and wine will rise by 7.2% next week as George Osborne proceeded with the tax escalator which automatically increases duty on alcohol by 2% above inflation (see the DrinkAware, Stop Smoking links).

Cigarette smokers face a jump of up to 50p on a packet of 20 from 6pm today despite the Chancellor sticking to Labour's previously-announced plans to raise tobacco duty by 2% above inflation, the tobacco industry says.

The additional jump is because he announced plans to change the "tobacco duty regime" stopping companies producing cheaper cigarettes.

Osborne said: "It's clear that the structure of the tobacco duty regime is being exploited to produce cheaper cigarettes so we will change the regime to narrow the differential between these lower cost brands and the rest, and between cigarettes and hand rolled tobacco."

Paul Stockall, a tax analyst with the Tobacco Manufacturers' Association, said the Chancellor's "differential" changes apply to "proportional and specific excise rates" equating to an approximate 50p rise on economy cigarettes and 33 pence on premium packs.

Further reading/Key links

Know your limit: DrinkAware, Stop Smoking