Consumer sentiment waned slightly in early July, as Americans were more optimistic about current economic conditions than they have been in six years, but that was offset by a decline in confidence over the recovery's prospects, a survey released on Friday showed.

The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment edged down to 83.9 from 84.1 in June, shy of forecasts for 85.

The barometer of current economic conditions accelerated to 99.7 from 93.8, the highest level since July 2007. But the gauge of consumer expectations slipped to 73.8 from 77.8.

While sentiment improved among lower income households, there was a decline in attitudes in those making more than $75,000 a year as more consumers worried about higher interest rates to come.

The one-year inflation expectation jumped to the highest level since February to 3.3 percent from 3 percent as consumers were concerned higher interest rates could slightly slow the pace of economic and employment growth.

The five-to-10-year inflation outlook held steady at 2.9 percent.

However, the recent higher rates could benefit the housing sector as one in five households with incomes in the top third said it was better to borrow before mortgage rates rise further.