FRANKFURT, July 31 Reuters Euro zone inflation unexpectedly edged up in July, data showed on Wednesday, although a widely watched gauge of price growth in the services sector eased.

Wednesday39;s figures did not seem to derail market expectations for an interest rate cut by the European Central Bank in September, but they were likely to strengthen concerns about a difficult last mile in the ECB39;s efforts to bring down inflation.

Price growth in the 20 countries that share the euro accelerated to 2.6 in July from 2.5 in June according to Eurostat39;s flash estimate.

A key measure of underlying growth in prices which excludes energy, food, alcohol and tobacco failed to show the expected decline and came in unchanged at 2.9.

It39;s a difficult print for the ECB, said Fabio Balboni, an economist at HSBC. Disinflation on the goods side is coming to an end and services inflation remains high.

Still, Balboni stuck to his call for ECB cuts in September and December, as did investors in euro zone money markets, on expectations that inflation would eventually ease.

I still expect a second rate cut to come in September, said Kyle Chapman, a foreign exchange markets analyst at Ballinger Group. I dont think it matters too much if we get the odd data point thats slightly stronger than expected.

Euro zone inflation has fallen a long way since briefly hitting double digits in late 2022, when it had been boosted in large part by a briskerthanexpected reopening of the…