With an aim to encourage smokers to quit and discourage people from taking it up, the Chancellor George Osborne has announced 37p rise in the price of a packet of cigarettes under the Budget 2012.

Rise in the cost of cigarettes came after the Chancellor revealed a hike in the duty on all tobacco products by 5% above inflation. Announcing the duty increase he admitted that the prime reason for premature death in the UK is smoking.

The Chancellor told the House of Commons that there is evidence that hike in the cost of tobacco will encourage smoking cessation. Osborne showed his determination to target tobacco by increasing 37p duty on cigarettes, which is double the combined tax hit in the two previous budgets.

Inflation-only duty rises from previous nine years added between 6 and 12 pence to the price of cigarette packet. The initiative was hailed by Deborah Arnott, chief executive of Action on Smoking and Health (Ash).

"This is excellent news. Raising the price of tobacco through taxation is the most effective way of encouraging smokers who want to quit to make that first step,” said Arnott. Expressing his delight he continued saying that the chancellor has taken a decisive action to handle the biggest cause of illness and premature death, as tax rise will put off young people from taking up the deadly habit.

According to the health experts at ASH, every 10-point duty rise helps reducing tobacco consumption by about 4%. Meanwhile, tobacco firms and smokers have slammed the duty increase saying that this move will increase the selling of smuggled and counterfeit cigarettes in Britain.

Simon Clark, director of the pro-smoking group Forest, said, "This is a smugglers' charter. More and more consumers will turn to the black market or buy their tobacco abroad."