Stronger-than-expected U.S. economic growth that's pushed thejobless rate to a five-decade low will contribute to an uptick ininflation this year, according to the Congressional Budget Office(CBO).

In its budget and economic outlook through 2030, the nonpartisanagency projects that gross domestic product (GDP) will rise 2.2percent this year, up 0.1 percentage point from its Augustestimate. A measure of prices excluding food and energy is alsoprojected to increase 2.2 percent, just above the Federal Reserve'sgoal. At the same time, the U.S. budget deficit will exceed $1trillion in the fiscal year that ends in September, similar to theagency's previous forecast.

"We also project that for several years, the economy will beproducing more than what we estimate to be its sustainable level ofoutput, leading to higher inflation and interest rates after adecade in which both remained low," Phillip Swagel, director of theCBO, said in a statement accompanying the annual long-termforecast.

The data come in an election year, as President Donald Trumpfrequently touts his economic record. The economy is now in its11th year of expansion, a record for the country, while the jobmarket remains relatively tight and consumers upbeat.

Meanwhile, the U.S. budget gap will continue to expand at a pacefaster than the economy will grow, primarily reflecting increasedmandatory spending as the nation's population ages. This year'sprojected shortfall above $1 trillion would be the first to topthat mark since 2012, after the government sharply boosted spendingto emerge from the financial crisis.

The deficit as a share of GDP will expand to 5.4 percent in2030, compared with an estimated 4.6 percent this year, the CBOsays. Financing the shortfall will require more government debtissuance, and the CBO sees debt held by the public reaching 98.3percent of GDP by 2030.

The CBO forecasts that the yield on the 10-year Treasury notewill average 1.9 percent this year and 2.2 percent in 2021. Theagency also expects the Fed to keep its benchmark rate unchangedthrough late 2021.

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