Cigarette Price Increase Fuels Inflation
(22/01/07)

The price hike on cigarettes imposed by the government in December has fuelled Irish Inflation which now stands at almost 5%. The price increase has not only hit smokers, but also non smokers as they notice a decrease in the value of the money in their pockets.

The annual rate of inflation rose in Ireland to 4.9% during December from a rate of 4.4% in November. Economists point to the 50c increase on the price of twenty cigarettes in the budget as one of main factors for the increase. A decrease of 0.1% occurred during the same period the previous year when no extra excise duty was imposed on tobacco products. Inflation is a serious threat to the booming Irish economy and economists had cautioned against any large increase on tobacco products.

Prior to the budget ASH Chairman Prof. Luke Clancy had called for a €2 increase on the price of twenty cigarettes. Had the government acceded to his demand Irish inflation would now be running at over 5%. In the past Prof Luke Clancy has called for tobacco to be removed from the consumer price index, a move if implemented which would hide the impact of price increases on inflation. In 2001 Michael Martin the minister who eventually introduced the smoking ban in 2003 had campaigned for such a measure supported by Prof Clancy.