US inflation eased to 3.4% year-on-year in July, helped by lower energy prices and more moderate housing-cost increases, while wholesale prices were unchanged for the month despite expectations for a rise. The back-to-back soft inflation readings lifted the S&P 500 to a record high, pushed traders to reduce expectations for a Federal Reserve rate hike next month, and supported a broader rally in Asian equities led by Japan's Nikkei 225. Markets priced in about a 35% chance of a September Fed hike, down from 55% a week earlier, though investors remained cautious because stronger oil prices, Middle East tensions and policy uncertainty around the Bank of Japan and the yen could revive volatility.