U.S. consumer sentiment in December reached the highest level since July, a report from the University of Michigan showed Friday, bolstered by falling energy prices.

The University of Michigan's final December measure of consumer sentiment rose to 91.5 from November's 81.6 and a preliminary 85.5 reading from early December, according to sources who saw the subscription-only report.

Wall Street economists polled by Reuters on average had predicted the December index to read 89.0.

However, the index came in below its December 2004 level of 97.1.

Lower energy costs have steadily improved consumers' outlook on spending and inflation since September, when the mood plummeted to the weakest level in over a decade on record high gasoline prices as a result of Hurricane Katrina.

However, gasoline prices have been creeping up in recent weeks, and natural gas prices posted historical highs heading into the winter heating season.

U.S. retail gasoline prices increased for a second consecutive week last week to $2.21 a gallon, up 2.6 cents from the prior week and up 40 cents from a year ago, the government said on Monday.

The sentiment survey's expectations gauge of consumers' outlook for the future rose to 80.2 in late December from 69.6 in late November and 77.3 in early December.

The index of current conditions, reflecting consumers' views on the economy, climbed to 109.1 from 100.2 at the end of November and 106.6 earlier this month.

Confidence measures are often used as a gauge of future spending patterns. Consumer spending makes up roughly two-thirds of overall U.S. economic activity and is seen as an indication of strength or weakness in economic growth.