NEW YORK (Bloomberg) - Junk-rated companies may default at triple the current rate within a year as surging oil and commodity prices erode their ability to pay back debt, according to a report from Moody's Investors Service.

Consumers faced with higher costs for food, natural gas and electricity may cut discretionary spending, driving weak companies closer to default, said Daniel Gates, chief credit officer for corporate finance at Moody's. The price of oil climbed 38 percent from April to June.

"A very large portion of the world's economy is moving in the wrong direction," Mr. Gates said in an interview. At least 35 companies have defaulted this year, more than in all of last year, he said.

Higher commodity prices are "potentially devastating" for homebuilders, airlines and automakers, and companies may be unable to refinance debt maturing in 2009 and 2010, the report said. Almost 90 percent of homebuilders have a negative outlook or are under review for possible downgrades, Moody's said.

Even companies such as Dallas-based Southwest Airlines, which has hedged more than 55 percent of its fuel costs through 2009, risk rating downgrades if they can't pass higher fuel costs to consumers, the report said. Moody's cut Southwest's outlook yesterday to negative from stable.

The annual rate of junk-grade defaults, which stood at 2.3 percent in May, will reach 5.8 percent by the end of 2008 and 7.1 percent within a year if commodity prices continue to rise, Gates said. Moody's will report the June default rate next week, he said.

Ratings downgrades still will not approach the highs seen in the 2002 recession, when five times more companies were downgraded than upgraded, the report said.