"Our 'Price Drop' and 'Price Lockdown' campaigns continue to resonate well with customers, driving improved price perception results as well as growth in customer numbers and units sold," Woolworths said.
"The Countdown Supermarkets food price index for the quarter was deflation of 0.1 per cent with deflation continuing across the major key categories, including grocery, meat and bakery."
New Zealand food prices have been subdued over the past year as globally low inflation keeps price increases muted.
Government figures show grocery food prices rose at an annual pace of 0.5 per cent in March.
Countdown opened five new stores in the first six months of the current financial year, refurbished three and closed two, taking its total store numbers to 174.
It expects to open a net six new stores over the full year, ahead of its long-term target of three to five stores a year.
The supermarket chain didn't open any new stores in the latest quarter, and refurbished one existing outlet.
Woolworths reported a 1.6 per cent decline in third-quarter sales to A$14.96 billion, and has targeted its Australian food and liquor division after disappointing sales in December and January.
The company today announced plans to strip out A$500 million of costs over the 2015 and 2016 financial years, focused on its non-customer facing operations.
Woolworths will also restructure its Australian and New Zealand supermarkets into one division, which it anticipates will deliver savings across the combined operation.
The ASX-listed shares fell 4 per cent to A$28.44.
