Bad news for smokers: in 2023 cigarette prices could rise even more than in previous years. The reason is that manufacturers sometimes pass on higher costs with a delay this year. Cheap cigarettes are also becoming increasingly scarce in neighboring countries.
Austrian smokers bought about 11.7 billion “Tschick” in their local tobacconists in 2022. That is about the same as before the crisis, according to tobacco manufacturer JTI (Austria Tabak). A package costs an average of 5.50 euros. But this year will increase pressure on manufacturers to raise prices, which could make cigarettes even more expensive than in years past. Energy and transport have become enormously more expensive. Some cost increases (eg for raw materials) will only be passed on with a delay this year. Both energy costs and prices for paper, tobacco, etc. will have risen sharply in 2022. However, some producers still had large quantities in stock and are now buying them at significantly higher prices.
Share of tobacco heater doubled
Many smokers are currently switching to alternatives such as tobacco warmers. The share more than doubled to 5 percent. But that also means less revenue for the tax authorities: “Due to the lower tax on tobacco heaters, the state misses out on 110 million euros a year,” says Ralf Wolfgang Lothert of JTI (Austria Tobacco). While 77 percent of the price of a pack goes to the state for conventional cigarettes, 10 percent of tobacco excise revenues for heated tobacco products remained at last year’s level (about two billion euros). In the first two years of the pandemic, they had increased significantly.
Prices in neighboring countries are rising
More was imported from neighboring countries, but not as much as before. Firstly, the price differences with countries such as Hungary or Slovenia are no longer as great as they used to be due to tax increases there. According to JTI, the price level in the Czech Republic is now the same as in Germany (5.50 euros). Secondly, shopping trips abroad were significantly more expensive due to the high fuel costs. Austrians brought 1.3 billion cigarettes from abroad to Austria, causing the finance minister to lose up to 270 million euros.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
