After a busy week of trying to sure up the Greek economy a deal appears to have been struck.  This has gone some way to appease the markets – which are particularly inept at coping with uncertainty.  How long the stability lasts remains to be seen.  UK stocks have reacted favourably to this news.

The best measure of the UK stock market, the FTSE All Share index, represents the performance of all 623 eligible companies listed on the London Stock Exchange. It has finished the week at 3,088.36, an increase of 20.00 points on the day and 42.85 points higher than its 3,045.51 opening value at the start of the week.

So far this year the FTSE All Share index, which accounts for approximately 98% of the UK’s market capitalisation, has gone up 25.51 from its’ opening price of 3062.85 at the start of trading on 4^th January 2011.

The recent CPI announcement – the governments target measure of inflation – was 4.2% in June, down from 4.5% in May.  This was attributed to a large drop in the price of toys, games (including computer games) and digital and AV equipment.  Offsetting this were large rises in the cost of food and non-alcoholic beverages where prices, overall, rose by 0.9%

With the Bank of England (BoE) base rate currently set at 0.5% (where it’s been since a reduction from 1.00% on 5^th March 2009) returns on cash deposits are getting steadily eroded by the ravages of inflation.  Based on the recent inflation figures, it seems the MPC was right to hold off on increasing the cost of borrowing.