Woolworths Ltd, Australia's biggest grocer, says price inflation for fresh foods is easing in its supermarkets.
And the company said inflation would have been worse in recent years, if not for the high level of competition in the Australian retail sector.
Woolworths boss Michael Luscombe told a business lunch in Melbourne inflation had fallen back under four per cent in April.
When Woolworths reported its third quarter sales figures last month, inflation in the retailer's food and liquor stores was running at 4.5 per cent, well up on a two per cent rise in the first half.
"We've just looked at the inflation rate for April, and it's actually come off a little bit," Mr Luscombe told the Australia-Israel Chamber of Commerce.
"So it's gone back under four per cent, which I think is great news."
Mr Luscombe later told reporters that produce deflation was driving the easing in the overall inflation rate in supermarkets.
"That started happening in the last bit of March, but in the last bit of April it's been pretty pronounced," he said.
But Mr Luscombe said it was "very hard to tell" whether the easing in inflation would also flow through to packaged goods.
Mr Luscombe will return to Melbourne on Monday to front the Australian Competition and Consumer Commission (ACCC) inquiry into grocery prices.
"I'm just going to answer the questions openly and honestly," he told reporters.
"We believe that we've got a great story to tell."
Earlier in his address to the business gathering, Mr Luscombe said competition in Australia's retail sector had helped combat higher prices.
"Woolworths' strong price leadership, particularly in those regional areas, I believe, has been a critical factor in helping to combat inflation," Mr Luscombe said.
"In fact, if it wasn't for the high level of competition in food retailing in Australia, I've no doubt that the inflation rate in recent years would have been far higher than it is now."
Mr Luscombe pointed to the surge in food and energy prices globally and said Australia was not immune from that.
In fact the upswing in commodity prices, especially in metals and energy, had begun around seven years ago and was linked to growing demand in the growth economies of India and China, he said.
Global food prices had increased around 60 per cent from last year according to United Nations figures, he said.
"My fervent hope is that the price signals that are being sent by this demand will hopefully spur on the agricultural sector to look at diverting more arable land towards the production of food in the future," he said.
"If that doesn't happen then I really worry about this globe's ability to feed itself in a decade or more."
