Woolworths (ASX:WOW) fell even further behind rival Coles in the third quarter, as sales growth in it revenue and profit centre - Australian food (its supermarkets) slowed to 1.5%, less than a third of the sales growth rival Coles reported from its supermarkets reported on Tuesday.

The country's largest supermarket chain said total group sales were up 2.8% at $16.80 billion for the March quarter.

The result was held back by another weak performance by its Big W mid-range department store chain which saw a 4.1% drop in sales fore the quarter.

Woolies said quarterly sales to $12.56 billion in its food (supermarkets) business on the back of higher volumes and grocery prices, but also warned of continued consumer caution despite moderating inflation.

Woolies said it again saw signs of "subdued item growth in discretionary categories" in supermarkets.

Woolies said its Australian supermarkets sales were up 2.5% excluding tobacco, compared to 6.6% reported by Coles.

"Looking ahead, we expect customers to remain cautious for at least the remainder of this calendar year," departing CEO Brad Banducci said in Thursday's release, adding that the firm has noticed an improvement in unit volumes as the quarter progressed.

Coles though did much better with group sales revenue from continuing operations up 6.4% to $10.033 billion for the quarter, reflecting the 5.1% jump in supermarkets sales to $9.065 billion. Comparable store sales in Coles were up 4.2% for the quarter, which was ahead of inflation.