NEW YORK (CNNMoney.com) -- The U.S. economy grew at a much slower pace in the fourth quarter than previously estimated, according to a government report that was a bit weaker than forecast but included an encouraging inflation reading.

The gross domestic product, the broad measure of the nation's economic activity, grew at an annual pace of 2.2 percent in the last three months of the year, according to the Commerce Department.

That's down from the 3.5 percent growth in the government's initial estimate of that period. It was still a little better than the 2 percent growth rate seen in the third quarter.

Economists surveyed by Briefing.com had forecast that the new reading would show a 2.3 percent growth rate.

The chain deflator, which measures prices, was up at an annual 1.7 percent rate, compared to the earlier 1.5 percent reading. Economists had forecast that would stay unchanged.

But the even more closely watched inflation measure in the report, the so-called core PCE deflator, which measures prices paid by consumers for products other than food and energy, rose at an annual pace pace of 1.9 percent, compared to the earlier reading of 2.1 percent.

Economists and investors generally believe the Federal Reserve wants to see that reading in the range of 1 to 2 percent, so the core PCE measure could raise hopes of a Fed rate cut.

Much of the lower growth estimate was due to a sharply lower estimate for business investment, as that came in as down 2.4 percent, compared to only a 0.4 percent decline in the earlier reading.

But the estimate for consumer spending also was revised lower, to a 4.2 percent growth rate from 4.4 percent in the earlier reading.