Hawai'i residents lost ground last year as inflation grew at a faster pace than personal income.

A report released yesterday by the U.S. Bureau of Economic Analysis shows Hawai'i's per-capita personal income rate rose to $40,490 in 2008, a 3.2 percent increase.

While the gain was higher than personal income growth nationally, it still was below the 4.3 percent inflation rate charted in Honolulu last year.

"We know inflation slowed down some throughout the year, but the income slowed down faster," said Carl Bonham, executive director of the University of Hawai'i Economic Research Organization.

He said a lot of the slowing in income growth came in the second half of the year, when unemployment rose and earnings from Wall Street investments took a hit. Overall the new personal income numbers contain good and bad news for the state. Personal income includes earnings from all sources, including wages, salaries, dividend income, investment earnings and rental income.