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%.