April 25 (Reuters) - U.S. Treasury yields hit more than five-month highs after data on Thursday showed that a measure of inflation rose more than expected in the first quarter, even as growth was weaker than thought.

Gross domestic product increased at a 1.6% annualized rate last quarter, below economists’ expectations for a 2.4% gain. Core PCE rose by 3.7%, above expectations for a 3.4% increase.

"The market is likely zeroing in on the hot inflation number in the report which was definitely a surprise," said Kevin Gordon, senior investment strategist at Schwab in New York.

Traders are focused on economic data for new clues on when the Federal Reserve will begin cutting interest rates. Those expectations were pushed back after consumer price inflation data for March released earlier this month was above economists’ expectations.

The data comes before Friday’s highly anticipated personal consumption expenditures (PCE) report for March.

The PCE data is “something that the Federal Reserve monitors very closely,” said Tom di Galoma, managing director and co-head of global rates trading at BTIG.

Fed funds futures traders are pricing in 35 basis points of easing this year, down from 43 basis points late on Wednesday, with the first cut seen likely in September or November.

Benchmark 10-year Treasury note yields were last up 5 basis points on the day at 4.704% and earlier reached 4.739%, the highest since Nov. 2. Two-year yields gained 6 basis points to 4.996%, and got as high as 5.027%, the highest since Nov. 14.

The inversion in the yield curve between two- and 10-year notes was little changed on the day at minus 29 basis points.

The Treasury saw OK demand for a $44 billion auction of seven-year notes, the final sale of $183 billion in short- and intermediate-dated debt this week.

The notes sold at a

high yield

of 4.716%, close to where they traded before the auction. Demand was 2.48 times the amount on offer, the lowest since November.

The government saw solid demand for a $69 billion sale of two-year notes on Tuesday, and a record $70 billion auction of five-year notes on Wednesday. (Reporting By Karen Brettell; Additional reporting by Sinead Carew; Editing by Barbara Lewis, William Maclean, Toby Chopra and Daniel Wallis)