Rising prices at petrol stations are likely to hit cigarette demand as smokers have less money available for impulse purchases when filling up, according to a new report by Barclays, reports CNBC.

The Russian war in Ukraine has pushed oil prices higher in recent days as the US and other Western countries imposed sanctions on Russia, although so far only Canada has banned its crude oil exports.
On 3 March, the US oil benchmark, West Texas Intermediate crude futures, was trading at prices last seen in the financial crisis days of September 2008, while Brent crude hit a high from May 2012, the report said.
In addition to its massive energy exports, Russia is also the world’s largest exporter of fertilizer and grains. According to CNBC, experts believe that prices could rise for a wide range of products, but cigarette manufacturers like Altria and British American Tobacco will likely be among the companies that see falling demand linked to higher oil prices.
Barclays analyst Gaurav Jain estimated that a 1 per cent increase in oil prices will lead to a 0.1 per cent decline in US cigarette volumes. Jain compared the current rise in oil prices to the sharp decline in 2014 to 2016, when US cigarette volumes remained about the same in 2015 after shrinking in 2014.
“The trend seems to suggest that as consumers saved more money at the gas station and went to the attached convenience store, they bought more cigarettes (impulse purchase item). Now as oil prices move higher, the reverse could happen,” he wrote in a note to clients.
For fiscal 2022, Barclays’ Jain is predicting that US cigarette volumes will fall by 5 per cent, with prices rising by 7 per cent, the report said. Looking for cheaper alternatives, some consumers will likely turn to other tobacco substitutes like e-cigarettes or modern oral nicotine pouches.