DEFINITION of 'Farm Price Index - FPI'

An index that monitors the prices received by farmers for sales including crops and livestock. The farm price index, which is released by the U.S. Department of Agriculture on a monthly basis, is a tool that analysts use as a leading indicator of inflation or deflation in the overall economy.

It is also known as the "Farm Products Price Index (FPPI)" or the "USDA Farm Price Index".

BREAKING DOWN 'Farm Price Index - FPI'

Farm prices are thought to be a leading indicator of food prices in the producer price index (PPI) and the consumer price index (CPI), and a sign of overall inflation or deflation. Because inflation (whether high or low) can have drastic effects on the investment markets, this is a valuable tool for predicting market movements.

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