(Reuters) -Australia's Coles saw a slowdown in comparable sales in the first quarter on Thursday due to lower shelf prices for its products, even as it beat market estimates for group sales.

Supermarket duopoly Coles and larger rival Woolworths are under pressure to cut shelf prices as they face wide-ranging criticism over a cost of living crisis in Australia.

The country's second-largest grocer posted a drop of 122 basis points in comparable sales to 2.4% for the 13 weeks to Sept. 29, from 3.6% in the prior corresponding period.

Coles, however, posted a 2.9% jump in first-quarter sales revenue to A$10.55 billion ($6.94 billion), higher than a Visible Alpha consensus of A$10.51 billion.

Shares of the Melbourne-headquartered retailer, which operates more than 1,800 retail outlets in Australia according to their website, rose marginally by 1.4% to A$17.950.

"Cost of living remains a challenge for many of our customers, and we are focused on helping them find value in our stores through weekly specials, value campaigns, Flybuys and exclusive brands," said Coles Group CEO, Leah Weckert.

The supermarkets division shoppers made value of promotional discounts and giveaways for Coles, while its e-commerce division saw a jump in revenue with newer features and developments.

In a note post Coles update, Jefferies said the grocer reported slightly weaker-then-expected sales, similar to Woolworths.

Jefferies analysts said Coles' commentary was "generally much more upbeat than Woolworths, with no mention of the margin pressure called out by Woolies."

The grocer, which is currently under trial by the national corporate regulator for allegedly misleading customers, separately announced an agreement to construct its third automated distribution centre in Truganina, thereby taking its capital expenditure expectations to A$1.3 billion for fiscal 2025.

"This underlines confidence in the first two that we expect to deliver A$105 million of cost savings this year," analysts at Citi wrote.

Meanwhile, Woolworths posted total group sales of A$18 billion for the September quarter on Wednesday.

($1 = 1.5211 Australian dollars)