Beginning last month and continuing in the lead-up to the January 13 release of the Consumer Price Index inflation report for December 2025, which showed monthly price increases of 0.3% and an annualized inflation rate of 2.7%, Fox Business host and former Trump economic adviser Larry Kudlow repeatedly claimed that CPI reports could start showing zero or even negative inflation, also known as deflation.

Kudlow based his claims on a recent dip in gas prices that are still nowhere near historic lows, and the surprisingly low inflation print in the November 2025 CPI report.

But economists and experts explained that the low inflation read in November was essentially a mirage based on missing and irregular data collection due to the government shutdown late last year. Prior to the November 2025 CPI report, Federal Reserve Chairman Jerome Powell warned that its numbers “may be distorted … because data was not collected in October and half of November,” and said that “we’re going to have to look at it carefully and with a somewhat skeptical eye.” Harvard University economist Jason Furman and Stripe chief economist Ernie Tedeschi specifically mentioned that the Bureau of Labor Statistics, unable to collect shelter inflation data in October 2025 due to the shutdown, simply assumed its value was zero which led to inflation being understated.

Inflation forecasts for 2026 show an expectation that the CPI will continue to be elevated throughout the year. The Congressional Budget Office’s economic projections show an expected annualized CPI rate of 2.8% over the next year, while the Blue Chip Survey of Professional Forecasters shows an average consensus expectation of a 2.9% inflation rate in 2026.

Yet according to Kudlow, who served as director of the National Economic Council during President Donald Trump’s first term and has been fabulously wrong in his economic predictions on numerous occasions, Americans should expect several months — or even entire quarters — of negative inflation. As economist Claudia Sahm explained last month, “we don't tend to see big price declines outside of recessions,” concluding that general deflation “in all likelihood would be very painful.” If Kudlow's deflation prediction does end up being fulfilled in the next year, it might not be cause for celebration.

• Kudlow: “You're going to have CPI reports that could be around 1%. You could have CPI where it's possible to show negative.” [Fox Business, Kudlow, 12/18/25]
• Kudlow: “We could conceivably get a number of months of a zero CPI, or even a negative CPI read.” [Fox Business, Kudlow, 12/19/25]
• Kudlow: “Prices are going to continue to come down. Gasoline prices, energy prices permeate the economy, you’re going to have negative CPIs and you’re going to have real GDP prints that no one believes possible.” [Fox Business, Kudlow, 1/5/26]
• Kudlow: “The drop in oil prices and gasoline prices is right now the greatest story never told. CPI reports in the months ahead could even come in negative. That’s right.” Kudlow continued: “I'm not saying every month, but you may get some negative prints because of falling energy prices, which are so important. Heck, October-November averages on the CPI [are] one-tenth of 1%, alright? It’s incredible.” [Fox Business, Kudlow, 1/6/26]
• Later during the same program, Kudlow noted “how important falling energy prices and costs are to virtually the whole panoply of prices out there, when you could get negative prints in the CPI coming up.” [Fox Business, Kudlow, 1/6/26]
• Kudlow: “Hundreds of articles are affected by oil, by petroleum, by petroleum derivatives. So we’re going to see, domestically, negative CPI prints at some point. I don't know when, but it’s going to happen.” Kudlow continued: “The last CPI, October and November combined, was one-tenth of 1%.” [Fox Business, The Big Money Show, 1/7/26]
• Kudlow told fellow former Trump adviser Art Laffer that economists and media “talk about the economy, and the labor market, and this and that, they never mention the economic impact of falling oil prices. … I’m just saying, Arthur, oil deflation? You’re going to get negative CPI prints.” [Fox Business, Kudlow, 1/7/26]
• Kudlow: “You could have a quarter or two — I’m just saying, it’s possible — a quarter or two of negative inflation, i.e. little bit of deflation, like minus 1%.” [Fox Business, Kudlow, 1/8/26]
• Kudlow: “You can have negative CPI prints. Negative monthly prints. I don't know that that'll happen, but it could happen.” [Fox Business, Kudlow, 1/9/26]
• Kudlow: “Negative CPI prints [are] coming from the positive oil shock.” [Fox Business, Kudlow, 1/12/26]