(Reuters) -Australia's Woolworths reported a rise in third-quarter sales on Thursday, boosted by an improving performance in the food retail segment, but warned of continued consumer caution despite moderating inflation.

The country's largest supermarket chain said total group sales were at A$16.80 billion ($10.97 billion) for the March quarter, compared to A$16.62 billion expected by Jefferies analysts and a 2.8% rise compared to the same quarter last year.

While cost-of-living pressures across Australia remained elevated, demand for groceries and essential items has stayed robust, with supermarkets passing the rising costs from suppliers on to shoppers.

The firm's Australian Food operation, its top revenue generator, reported a 1.5% rise in quarterly sales to A$12.56 billion on the back of higher volumes and grocery prices.

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

($1 = 1.5319 Australian dollars)