Excerpt from Tobacco Situation, Vol. 121: September 29, 1967

The continuing rise in total consumption of cigarettes by u.s. Smokers largely reflects more people of smoking age, high levels of consumer income, and heavier ship ments for use by the armed forces. These same factors appear likely to result in a further modest increase in total cigarette consumption in 1968.

Cigarette consumption per capita (18 years and over) in 1967 is estimated at h,295 (21u% packs)-slightly above 1966 and second only to 1963, when it was u,3us. (see table 2. Average consumption per smoker would exceed this per capita measure.) Manufacturers raised cigarette prices in early June this year. The June indexes of consumer prices for cigarettes reported by the Bureau of Labor Statistics did not fully reflect the rise in retail prices expected as the result of the advance in manu facturers' prices. The consumer price indexes for cigarettes are reported quarterly, and the September indexes will reflect the full effect of the early June advance in wholesale prices of cigarettes. The percentage rise in manufacturers' prices (less the Federal excise tax and trade discounts) was about 5 percent, and the increase in cigarette prices at the consumer level was probably 25 to 3 percent.

Retail prices of cigarettes in several States have risen recently, due to in creased tax rates. Effective August 1, California increased its cigarette tax from 3 to 7 cents per pack; a further rise to 10 cents per pack becomes effective October 1, 1967. Illinois raised its cigarette tax from 7 to 9 cents effective August 1. Other States that recently raised their cigarette tax rates included Iowa, Maine, New Hamp shire, Tennessee, and wyoming. All States, except North Carolina, tax cigarettes. The weighted average rate of State cigarette taxes-about cents per pack as of Octo her 1, 1967-is 10 percent higher than a year ago. A substantial number of city and local governments also tax cigarettes. The Federal tax on cigarettes is 8 cents per pack.

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