Introduction Increases in tobacco price are known to reduce smoking prevalence, but these correlations may be blunted by the availability of budget cigarettes, promoted by the tobacco industry to maintain profits.

Objective To investigate the effect of budget cigarettes on cigarette consumption using data from Europe 2004–2014.

Methods Data on the annual population-weighted cigarette consumption per adult come from the International Cigarette Consumption Database. Data on the annual tobacco price come from Euromonitor International for 23 European countries. Median prices and price differentials (operationalised as percentages obtained by dividing the difference between median and minimum prices by the median price) were examined. A linear random-effects model was used to assess associations between median prices and price differentials with cigarette consumption within 1 year and with a 1-year time lag.

Results Cigarette consumption per capita declined over the study period (−29.5 cigarettes per capita per year, 95% confidence interval −46.8 to −12.1). The analysis suggests that increases in cigarette price differentials, a marker of opportunities for smokers to switch to less expensive cigarettes, may be associated with greater consumption in the same year (6.4 for a 10% increase in differential, −40.0 to 52.6) and are associated with greater consumption in the following year (67.6, 25.8 to 109.5).

Conclusion These analyses suggest that even in Europe, where tobacco taxes are relatively high compared with other regions, differential cigarette pricing strategies may undermine tobacco control. Further research is needed on links between tobacco price structures and consumption, and policy design to maximise the effectiveness of tobacco taxation.