FRANKFURT The heat was on the European Central Bank on Tuesday to cut its key rates and help prop up the ailing euro-zone economy after the latest data from Germany, the euro area's biggest economy suggested there was room -- and need -- for such action. Preliminary July inflation data on Tuesday showed that price pressures in Germany, the ECB's main argument against further rate cuts, were fading fast. And a day earlier, the latest monthly business survey by the leading economic think tank, IFO, had shown that German industrial confidence slumped to a five-year low, a development which some economists blamed on the ECB's refusal to cut the cost of borrowing in the single currency area. Preliminary pan-German inflation is calculated on the basis of consumer price data for six regional states -- Baden-Wuerttemberg, Bavaria, Brandenburg, Hesse, North Rhine-Westphalia and Saxony. Yesterday, five of the six so-called indicator states had published their latest cost-of-living data and all sets of figures pointed to a sharper-than-expected slowdown in inflation in July owing to slower increase in fuel and food prices. The ECB defines price stability as price increases of no more than 2.0 percent, but euro-zone inflation has exceeded that all year, propelled by sharp increases in food and fuel prices. According to AFP, that was the reason why the bank has only trimmed a quarter of a percentage point off its key rates so far this year, despite the sharp deterioration in global economic conditions. The slowdown in inflation in July could therefore open the door to further rate cuts in the not-too-distant future, economists suggested. The inflation data were "not only good news for the ECB, but also for the consumer-led recovery in domestic demand that we foresee in the second half of this year," said Bartsch at Morgan Stanley Dean Witter. Indeed, declining inflation in another euro-zone economy, France, had already led to a pickup in household consumption there in June, separate data published in Paris on Tuesday showed. However, with other forward-looking indicators signalling little or no brightening of the growth prospects, a cut in euro-zone interest rates could be the only way of dispelling the current gloom hanging over the single currency area, economists said. A renewed slump in a key business confidence index in Germany last month underlined the growth risks in Germany, said UBS Warburg economist Holger Fahrinkrug. But it still might not be enough to persuade the ECB into cutting rates, he cautioned. "Although the confidence data suggested that the growth risks in Germany had increased, the ECB is unlikely to change its view that euro-zone growth will remain consistent with a trend of 2.0-2.5 percent," Fahrinkrug said. That meant that a rate cut before the ECB's month-long summer break in August remained unlikely, he concluded.