U.S. inflation is likely to climb higher than previously thought but the recovery will not stall as interest rates will be held down until early next year, according to the latest Reuters poll of economists.

Expectations of growing demand for commodities have driven prices higher, while oil prices are not far from more than two year peaks reached on speculation that unrest in the Middle East could trigger further supply disruptions.

Even so, analysts said the drag on consumer spending from higher gas prices will not be too severe and companies generally aren't expected to pass on to customers much of the higher costs they are experiencing.

Inflation is going to be higher than most expect, but I do expect it to moderate some in 2012, said Hugh Johnson, chief investment officer of Hugh Johnson Advisors LLC in Albany, New York. Does this mean there is a genuine threat to the recovery? No.

Even so, the consensus for first quarter GDP was revised down sharply to 2.5 percent from the 3.5 percent expected last month. Economists predict the economy likely hit a soft patch in the first quarter, partly due to severe winter weather. For the year, growth is seen at 2.9 percent, slightly lower than previous expectations of 3.1 percent.

Trade data for February released on Tuesday showed weak readings for imports and exports, weighed down by slackening demand amid soaring commodity prices, which means the actual growth rate when reported is likely to be even weaker.

The poll's findings echoed the International Monetary Fund's World Economic Outlook report released earlier in the week, which found high oil prices and inflation in emerging economies pose new risks to the global recovery.

The IMF's expectations for U.S. GDP were slightly lower, though, forecasting growth at 2.8 percent this year and 2.9 percent in 2012.

Finance ministers from the Group of 20 major economies will meet in Washington on Thursday and Friday in conjunction with the IMF and World Bank spring meetings, which are expected to focus on trade imbalances and budget deficits in developed nations.

FED FAST

Despite inflation becoming more of a concern, economists still do not expect the Federal Reserve to raise interest rates until the first quarter of 2012, as expected in a poll conducted a month ago.

Fed officials are divided on the timing the central bank's exit strategy as they try to balance signs of rising inflation with the risk of ending its extraordinarily accommodative policy before the economy is strong enough.

The European Central Bank, on the other hand, raised interest rates last week for the first time in almost two years and policymakers signaled on Wednesday they are ready to tighten policy further.

The poll consensus has inflation peaking at 3 percent in the third quarter compared with 2.5 percent in the last poll. It is expected to average 2.7 percent for the full year, up from earlier expectations of 2.2 percent.

Core inflation, which strips out volatile items including food and energy and is more closely watched by the Fed, is seen only modestly higher.

The job market looks to have turned a corner and economists expect the unemployment rate will be 8.8 percent in the second quarter and 8.7 percent for the year overall.

Since the start of the year, the unemployment rate has receded from 9 percent in January to 8.8 percent in March.

While improvement in the labor market has gained traction in recent months, the economy has recovered only a fraction of the roughly 8 million jobs that were lost in the worst recession since the Great Depression.

(Polling by Bangalore Polling Unit; Editing by Catherine Evans)

Inflation