Yes, this hadith is authentic. It is reported in Sahih Muslim
"Do not initiate greetings with the Jews and Christians. When you meet any of them in the road, then make him take its narrowest path." (Sahih Muslim 2167)
However, there is a context to it.
Ibn Al-Qayyim said,
"It is said that this was in a specific situation, when they were marching to the tribe of Qurayzah" (Zād al-Ma’ād 2/388)
This Hadith is also quoted in the chapter of Military Expeditions
Verily, I am riding against the Jews tomorrow, so do not greet them with peace and if they greet you with peace, then say: And upon you. (Ibn Majah 3699; Authenticated by Albani)
There is a similar authentic narration in Musnad Ahmad:-
Verily, I will depart against the Jews in the morning, so do not greet them with peace and if they greet you with peace, then say: And upon you. (Musnad Ahmad 26695; Authenticated by Al-Haythami in Majma’ al-Zawāʼid 8/44)
So we can see that it said in a specific context.
Furthermore, there is enough evidence in the Hadith that it is prohibited to harm the people of the book who live peacefully with Muslims.
Ibn Hibbaan included a chapter in his Saheeh entitled, “The Fire is the lot of the one who says things to offend the People of the Book,” in which he quoted the hadith of Abu Moosaa, from the Prophet (blessings and peace of Allah be upon him), who said: “Whoever says something offensive to a Jew or a Christian will enter the fire.” This hadith was classed as saheeh by Shu‘ayb al-Arna’oot in Tahqeeq Ibn Hibbaan, and by al-Albaani in as-Saheehah, no. 3093. (Source: Islamqa, Fatwa no.321731)
As far as the issue of greeting Non-Muslims is concerned, it is disputable. This website provides some apologetic arguments for greeting Non-Muslims:-