Rutte disagrees with recent discussions on grabflation and China relationship

Prime Minister Mark Rutte said during his weekly press conference on Friday that companies significantly raising their prices have a responsibility to be "highly transparent" about it, but refused to comment on possible indications of "grabflation." He also highlighted the importance of maintaining dialogue with countries like China, in light of Chinese Vice President Han Zheng's recent visit to the Netherlands.

Rutte expressed "as a liberal" –proponent of the free market– that businesses should be allowed to make a profit, but should also clarify the reasons behind a substantial increase in their prices. Regarding "grabflation" –companies secretly driving up prices more than necessary in times of inflation to boost profit margins– he refrained from commenting. "There are significant differences between companies. We don't have enough information about that," he said.

Last week, a study by Rabobank revealed indications of grabflation, particularly in the last quarter of 2022 when profits exceeded what was necessary to compensate for inflation. The study suggested that if companies had been more restrained with their price increases, total inflation could have been reduced by over 2 percentage points.

However, Rutte found Rabobank's argument "too thin." He said companies should give clarifications about their price increases, allowing for further public discussion.

There are currently no plans to curtail the excessive profits of supermarkets or banks, which often make high profits. However, this was done with oil companies, which saw massive profits due to the surge in gas prices following the war in Ukraine. "You can't blame Shell for that. But we did say that we wanted something in return," he added.

Economic Affairs Minister Micky Adriaansens also voiced her disagreement with the term "grabflation," labeling it as polarising. She echoed Rutte's sentiment that there are significant differences between companies.

Rutte responds to criticism over bilateral meetings with China

During the same press conference on Friday, Rutte stated that ceasing communications with countries like China would be detrimental to the Dutch economy. He stressed the need for caution when considering an end to talks between countries due to differing viewpoints. "I really have to emphasize this," Rutte said in response to press inquiries about the Netherlands' relationship with China. “That is very bad for the country. Bad for our economy, but also definitely bad for our political influence."

On Thursday, both Rutte and King Willem-Alexander received Chinese Vice President Han Zheng. Despite the visit being criticized due to China's human rights violations, its stance towards Taiwan, and serious concerns about Chinese espionage, Rutte referred to the relationship with China as "important." He expressed his disagreement with the idea of discontinuing dialogue with countries like China.

Last month, the Dutch security services AIVD and MIVD released alarming reports about Chinese espionage activities. According to military intelligence service MIVD, Dutch companies and educational institutions are widely targeted by Chinese espionage. The civilian service AIVD labeled China as the biggest threat to the economic security of the Netherlands.

Rutte did not give details about his discussions with Han. However, he confirmed that human rights issues were part of their conversation.