Inflation concerns were re-ignited during U.S. morning hours Thursday, sending risk assets — crypto among them — sharply lower.

The July Producer Price Index (PPI) rose 0.9%, blowing past estimates for 0.2% and 0.0% in June. On a year-over-year basis, PPI was higher by 3.3% versus forecasts for 2.5% and June's 2.4%.

Core PPI, which excludes food and energy, also surged 0.9% in July, far exceeding the 0.2% expected and 0.0% in June. Core CPI year-over-year rose 3.7% against 2.9% expected and 2.6% in June.

Already well off a record high hit overnight above $124,000, bitcoin (BTC) tumbled below $119,000 on the news. Ether (ETH) plunged nearly 4% to $4,550. Other recently red-hot altcoins like solana (SOL) and XRP (XRP) were similarly struck.

Fresh labor market data provided no relief, with initial jobless claims for the week ending August 9 at 224,000, slightly below the 228,000 expected, and continuing claims holding at 1.95 million. The still-tight labor market, combined with the strong PPI readings, reinforced the view that the Fed may keep interest rates elevated for longer to tame inflation.

According to CME FedWatch, the previous 100% chance for a September rate cut slipped to 96% in wake of the fresh data.

In traditional markets, U.S. stock index futures have slipped 0.5%, the dollar is gaining ground and the 10-year U.S. Treasury yield moved higher by five basis points to 4.25%.