UK retailers are increasingly losing out to the illicit trade, with illegal tobacco and spirit sales having both risen, official new data shows.

Illicit cigarette sales have grown from 7% of the market in 2011/12 to 9% in 2012/13 according to mid-point estimates from the 2014 edition of HMRC’s Measuring Tax Gaps survey.

Rolling tobacco sales continue to be the worst hit segment of the tobacco market. According to mid-point estimates, 36% of sales of rolling tobacco made in the UK are illegal, also up from 35% in 2011/12.

When it comes to spirits, 5% of sales are thought to be illegal, also up from 4% in 2011/12, while 12% of the UK’s beer market is also thought to be illicit – no change from 2010/11.

A JTI spokesman attributed the rise in illicit tobacco sales to above inflation duty increases. “JTI calls on the chancellor to abandon the duty escalator as this only provides further incentives for criminals to prosper. The consequence of this tax policy is the creation of an extremely serious problem in the UK, as the scale and its impacts undermine businesses, revenue receipts and health policy,” he added.