The US economy continued to slow in the first part of the year, growing at the slowest annual pace in four years, while at the same time a key measure of inflation continued to rise, the Commerce Department said today. The department estimated the economy grew at a 1.3 pct annualised rate between January and March, slower than the 1.9 pct economists had expected for the quarter and the slowest annualized pace since the first quarter of 2003. The economy grew at a 2.5 pct annual rate in the fourth quarter, after growing at a 2.0 pct annual rate in the third quarter of last year. For all of 2006, the economy grew at a 3.3 pct pace. Measuring the first quarter from the same period a year earlier, the economy grew at a 2.1 pct pace, the slowest increase since the second quarter of 2003. Inflation, as measured by the PCE price index, rose 3.4 pct in the first quarter, up sharply from the 1.0 pct decline in the prior quarter and the fastest increase since the second quarter of last year. The Fed's preferred measure of inflation, the core PCE price index, which excludes volatile food and energy prices, rose 2.2 pct in the quarter, up from the 1.8 pct increase in the fourth quarter and the fastest pace since the third quarter of 2006.