Popular cigarette brands are selling at Rs 1 or Rs 2 per pack costlier than the maximum retail price (MRP) quoted on the pack.

Industry sources said that cigarette prices have increased sharply over the last 2-3 weeks as hoarders have stocked cigarettes in anticipation of a excise hike in the budget.

"An excise hike in the budget will lead to an immediate increase in prices. Hoarders will offload their stock in the market at that time" said sources.The main brands affected by the price rise belong to ITC's flagship brand, Wills.

A 10-stick pack of Wills Navycut is now costing Rs 18 to the consumer as against the quoted MRP of Rs 17.50. Similarly, a Wills Classic pack containing 20 sticks is costing Rs 45 as against the MRP of Rs 44 quoted on the pack.

The worst-hit are the small retailers and paan-shops who have had to shell-out much more for cigarette cartons recently.

Acarton of Wills Classic containing 10 packs, is costing the retailer Rs 440 as against the Rs 410 paid earlier.

"Not only do I have to pay more, it is very difficult to even get some of the popular cigarette brands these days from the wholesale market" a retailer told The Financial Express.

ITC Ltd refused to comment on the price rise. With a market share of 65 per cent, ITC dominates the cigarette market.

Its closest rival, Godfrey Phillips India Limited (GPIL), has a 25-30 per cent market share. GPIL's flagship brand, Four Square, did not report a price rise.

Cigarette companies, represented by the Tobacco Institute of India (TII) have urged the Government to retain the current excise levels on cigarettes in the union budget to be presented in Parliament on Tuesday. This will help maintain cigarette prices at current levels, TII has said.

However, last year, cigarette majors hiked prices after the budget for all cigarette segments though excise had been raised only for mini cigarettes.Theprice increase was made to shore-up bottomlines of cigarette companies.

Cigarette sales in the current fiscal dropped by 5-6 per cent as compared to last year. A number of reasons, such as annual price increases led by excise hikes, ban on sale of cigarettes at railway platforms and increasing health awareness, are believed to be responsible for drop in cigarette sales.