The Chancellor has missed an opportunity to end the "ridiculous" situation of a pack of cigarettes costing less in real terms than it did in the 1960s, health campaigners have said.
Tobacco duty will rise by 2% above inflation, and the escalator will be extended for the rest of the next Parliament.
British Lung Foundation chief executive Dr Penny Woods said: "By not heeding the recommendations of health experts to increase tobacco taxation by 5% above inflation, the Chancellor has missed a great opportunity to help put an end to this ridiculous situation in which a pack of cigarettes today costs less in real terms than it did in the 1960s.
"This Government has made encouraging moves on issues such as standardised packaging and smoking in cars carrying children to try and cut the impact smoking has on the nation's health.
"However, with research showing taxes to be one of the most effective tools in encouraging people to quit smoking, medical professionals and health campaigners around the country will be disappointed with the Chancellor's decision not to use this tool to the extent so many of them have called for.
The Tobacco Retailers' Alliance (TRA) said the 2% increase played into the hands of tobacco smugglers.
TRA spokeswoman Debbie Corris said: "With the Chancellor's announcement, smugglers will now make even more profit, encouraging more of them to ply their illegal trade in communities across the UK, selling to customers no matter what their age.
"This in turn will mean lost sales for legitimate retailers like myself."
Action on Smoking and Health chief executive Deborah Arnott said: "While we are pleased that the Chancellor has made a commitment to extend the annual 2% above inflation tax rise on tobacco, he has missed an opportunity to give smokers a strong incentive to stop smoking.
"Although some people will cut down or quit, there is a real risk that many smokers will simply switch to cheaper brands or hand-rolled tobacco."