WASHINGTON, March 27 (Reuters) - U.S. consumer sentiment eased to a three-month low in March as war in the Middle East boosted oil prices and unleashed volatility on financial markets, raising concerns about the economy's prospects, a survey showed on Friday.

The University of Michigan's Surveys of Consumers said its Consumer Sentiment Index dropped to a final reading of 53.3 this month, the lowest reading since December, from 55.5 earlier. Economists polled by Reuters had forecast the index easing to 54.0. It was at 56.6 in February.

"Consumers with middle and higher incomes and stock wealth, buffeted by both escalating gas prices and volatile financial markets in the wake of the Iran conflict, exhibited particularly large drops in sentiment," said Joanne Hsu, the director of the Surveys of Consumers. 

Oil prices have soared by more than 30% since the U.S. and Israel launched attacks against Iran at the end of February, plunging the Middle East into turmoil.

Retail gasoline prices have jumped $1 to $3.98 per gallon, data from motorist advocacy group AAA showed. Surging oil prices have also sparked a stock market selloff, which economists warned would undermine consumer spending.

The survey's measure of consumer expectations for inflation over the next year jumped to 3.8% this month from 3.4% earlier and in February. Consumers' expectations for inflation over the next five years slipped to 3.2% from 3.3% last month.