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Australia's largest supermarket chain Woolworths has reported lower-than-expected first quarter food sales due to tight consumer spending and a strengthening Australian dollar.

The retailer posted comparable food and liquor sales growth of 2 per cent, just missing market forecasts of 2.3 per cent, according to Reuters.

In a statement, the company's chief executive Michael Luscombe said the results were positive, but warned that tight consumer spending would make for a challenging year.

'The sales result is a solid start to the financial year, which continues to hold underlying challenges for the retail sector, such as tighter consumer spending and the deflationary impacts of the stronger Australian dollar,' he said.

He added that Woolworths had been cutting prices to help maintain market share and increase customer numbers and items sold, in the face of increased competition from chief rival Wesfarmers-owned Coles.

According to the Sydney Morning Herald, Coles has also cut prices and improved its fresh fruit and vegetable offerings, and is overhauling its supply chain.

Woolworths total quarterly sales, including petrol, grew by 4.1 per cent to A$13.9bn, the financial press reports.