The good news from Wednesday is that annual inflation slowed from 6 percent in February to 5 percent in March, according to the Labor Department’s consumer price index. 

That’s the lowest reading since May 2021. 

Food prices, which have remained stubbornly high, rose 8.5 percent annually in March. That’s down from 10.2 percent in February and the peak of 13.5 percent last August. The price of eggs saw the biggest monthly dip in 36 years. 

Analysts said that the report shows progress from the Federal Reserve’s interest rate hikes, which are aimed at slowing the economy and reducing demand for goods and services to bring down prices. 

“This report leaves little doubt that the disinflationary process is well underway,” EY chief economist Gregory Daco wrote in a note. 

Still, Fed officials have predicted that the slowdown could lead to millions of job losses, and recession fears have only picked up following high-profile bank failures. 

According to minutes from the Fed’s March meeting also released Wednesday, Fed staffers said that banking sector troubles will likely tilt the U.S. economy into a “mild recession starting later this year, with a recovery over the subsequent two years.” 

As they face unrealized losses on bond investments and the threat of commercial mortgage defaults, banks are getting more conservative with their lending. That means capital will be harder to come by for businesses that rely on financing to grow and hire workers.