(Adds details from report)
OTTAWA, April 17 (Reuters) - Canada's annual inflation rate unexpectedly rose in March, lifted by higher food prices as a decline in gasoline prices moderated, data from Statistics Canada showed on Friday.
Still, at 1.2 percent, the annual rate held close to the lower end of the central bank's target range. Economists had forecast inflation would be unchanged from the previous month at 1 percent.
Core inflation, which strips out volatile items and is closely watched by the Bank of Canada, likewise was stronger than expected as it rose to 2.4 percent on an annual basis from 2.1 percent the previous month.
Prices rose in seven out of eight major components for total annual inflation, led by a 3.8 percent increase in food.
Lower gasoline prices continued to be the biggest downward driver, tumbling 19.2 percent, though the drop was not as steep as in February.
On a monthly basis, total inflation rose 0.7 percent, while core rose 0.6 percent.
The Bank of Canada earlier this week held interest rates steady, refraining from following up on January's shock rate cut, as it expects the economy will rebound later this year after likely stalling in the first quarter.
Reporting by Leah Schnurr; Editing by Bernadette Baum