The U.S. economy was slightly stronger in the fourth quarter than previously thought, but inflation was slightly higher as well, government data released Thursday show. U.S. real gross domestic product grew at a 1.7% annualized rate in the quarter, compared with the earlier estimate of 1.6% and an original estimate of 1.1%, the Commerce Department reported Thursday. It was the final estimate of quarterly growth. The revision was as expected by economists surveyed by MarketWatch. The economy grew 4.1% in the third quarter. Meanwhile, corporate profits increased a record $185.8 billion at an annualized rate in the fourth quarter and were growing at the fastest pace in three years. The upward revision to GDP was due largely to higher inventory building by businesses, which offset lower consumer spending on services. Final sales in the economy, which excludes inventories, fell 0.2% in the quarter, the weakest performance since the first quarter of 2002. Consumer spending expanded at its weakest pace in 11 years. Economists say the slump in the quarter was largely the result of temporary factors that have already faded, including the impact of Hurricane Katrina and the end of very generous sales incentives that boosted auto sales in the summer months. Economists expect that the economy grew at a 4.6% in the first quarter, which ends Friday. Growth is then expected to revert to trend growth of about 3.2% in the second quarter. In its post-meeting statement on Tuesday, the Federal Reserve said it agreed that the economy had bounced back robustly from a temporary lull in the fourth quarter and expected growth to moderate later this year The Fed said it was concerned about inflationary pressures, and the GDP report ratified some of those fears. Core consumer inflation increased at a 2.4% annual pace in the quarter, higher than the 2% implicit target of the Fed, and up from 2.1% estimated a month ago. In the past year, core inflation has risen 2%. The gross domestic purchases price index - which includes purchases by consumers, businesses and government -- increased 3.7% annualized.