The increase was the second this year, following a rise of about 5 cents a pack in March. The latest increase amounts to a rise of about 7.5 percent in the wholesale price of cigarettes, which should translate into a 4 percent increase at retail.
Analysts said the latest increase should cover the first-year costs of legal settlements reached with the states of Mississippi and Florida over the states' claims to recover Medicaid payments made to treat sick smokers.
They said the industry's quick move to match the biggest cigarette maker, Philip Morris USA, in raising prices may be intended to encourage Congress to approve a broader national legal settlement reached in June.
The White House is reviewing that proposed $368.5 billion settlement plan reached with a majority of state attorneys general and various anti-smoking activists.
Higher tobacco prices could reduce demand for cigarettes by youngsters, backers of the agreement say. But critics have called the settlement too generous to the tobacco industry and say it is unfair to have current smokers shouldering the costs.
The 7.5 percent wholesale price increase would be the biggest in percentage terms since a 12 percent rise in late 1988, according to industry analyst Gary Black of Sanford C. Bernstein & Co.
Black said it would generate about $1.6 billion in extra revenue in the first year, which he said would more than offset the first-year payments required under the settlements the industry has struck under an $11.3 billion deal with Florida and a $3.6 billion agreement with Mississippi.
Black said if the national settlement were approved, tobacco prices would have to be raised 40 cents per pack to meet the first year costs and an additional 35 cents per pack over the next five years.
Philip Morris, which makes the top-selling Marlboro brand, told wholesalers Friday that it was boosting prices by $3.50 for every 1,000 cigarettes ,effective on orders the day after Labor Day. There are 20 cigarettes to a pack.
Rivals R.J. Reynolds Tobacco, maker of Winston and Camels, and Brown & Williamson Tobacco, which sells Kool, Carlton and Lucky Strikes, followed suit.
Philip Morris spokesperson Brendan McCormick declined to say what caused the increase. Reynolds spokesperson Maura Ellis cited "our increased costs of doing business" but declined to elaborate.
Tom Fitzgerald, a spokesperson for Brown & Williamson, said the recent Florida and Mississippi settlements as well as other factors played a role in the price hike.
David Adelman, a tobacco analyst for Morgan Stanley Dean Witter, said raising prices in increments could make it easier for smokers to get used to higher prices without driving them to quit because of a large one-time boost. He said gradual increases also could discourage vendors from hoarding cigarettes in anticipation of a big price jump.