PARIS (Reuters) – The inflation spike currently occurring in France and in the wider euro area is nearing its peak, while recent COVID-19 infection in France has a minimal impact on the economy, according to the French head of central bank.

France, like many other economies, saw its inflation rise over the past year due to a rebound in demand for goods, services, and food after the COVID-19 crises, which hampered business supply chains, and drove up energy prices.

INSEE National Statistics Office stated earlier Tuesday that the inflation rate remained steady in December compared with November, at 3.4%. That’s a new high after months and steadily rising according to preliminary EUharmonised data.

Francois Villeroy, Governor of Bank of France said that inflation is “now close to its peak” in his country (December showing the first signs of stabilisation), and within the Euro area. This was in an address for the New Year released by the bank.

We remain vigilant but believe supply problems and energy pressures will gradually ease over the course the year.

According to the quarterly economic outlook of the central bank, inflation is expected to fall from around 3.5% in 2021 to less than 2% at 2022.

The forecast also indicated that growth in the second largest economy of the eurozone would moderate to 3.6% this year, compared with 6.7% last year.

France’s fifth wave of COVID infection has been resurgent since the forecasts were made by the central bank. This forced the government to tighten its health regulations.

Villeroy maintained that the economic effect would not be significant because there was a diminishing impact with each wave.

He stated that, even though tighter health regulations than are currently in place this year would reduce growth by a significant amount, it would still be offset completely with increased growth in 2023.