Cigarette and alcohol tax warning from site

17/06/2009

Inflation could be on the increase soon, with booze and cigarettes targeted for tax increases.

This is the warning issued today by The Motley Fool, a specialist personal finances website.

An expert at the site said that the government is currently looking for ways to balance its books, due to the big debts it is running up in the recession.

Official figures predict that deficits will hit £175 billion for this year alone - money that needs to be paid back eventually.

Tax changes have already resulted in increases in costs for alcohol and tobacco.

The Motley Fool released its forecast following new inflation figures, which showed a small fall for May.

Consumer price increases dropped from 2.3 per cent in April to 2.2 per cent last month - a much less severe drop than had been predicted.

David Kuo, director at the site, said: "The largest upward contribution to the change in [inflation] in May came from alcoholic beverages and tobacco where price increases reflected the increase in excise duty.

"It is naive not to expect more tax hikes or a reversal of previous tax cuts if the gaping hole in Britain's finances is to be plugged. Therefore, talk that inflation is dead is not only greatly exaggerated but also dangerous."

Tags; Budgeting Advice, Retirement Money Problems, Credit Card Lifestyle, Recent Graduate Debt,

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