* Coles Q4 sales narrowly miss analyst forecasts
* Bunnings like-for-like sales up 2.9 pct in Q4
* Target Q4 same-store sales up 4.5 pct, Kmart up 2.1 pct
* Food and liquor price deflation 4 pct in Q4 (Adds company comment, details)
MELBOURNE, July 26 (Reuters) - Australia’s Wesfarmers Ltd said sales rose at its Coles supermarkets in its fiscal fourth quarter as higher sales volumes and government handouts offset record price deflation.
The retail-to-coal company said on Thursday same-store food and liquor sales at Coles, which makes up about half of group revenue, rose 3.0 percent in the fourth quarter from a year earlier.
That was a touch below market forecasts for 3.2 percent growth, according to a Reuters survey of five analysts, and compared with growth of 1.3 percent at top rival Woolworths Ltd .
Sales in the three months to June 24 compared with 2.7 percent growth in the third quarter.
“The result was driven by sustained strong volume growth,” Wesfarmers Chief Executive Richard Goyder said in a statement.
Volume growth accelerated in the fourth quarter as more customers shopped at Coles, and bought more during each visit, attracted by price cuts.
Food and liquor price deflation was 4 percent in the fourth quarter, driven by a price war as Coles competes with Woolworths.
Both chains, which control about 80 percent of the grocery market, have slashed the cost of basic items such as food, milk and toilet paper to win foot traffic.
Australian retailers in general have been forced to deeply discount and accept shrunken profit margins as consumers respond to economic uncertainty and falling home and share market values by freezing spending.
Goyder said Wesfarmers was committed to offering “greater value” in the future.
Sales at Wesfarmers’ other retail divisions reflected the weak spending environment.
Fourth-quarter sales at home improvement chain Bunnings rose 2.9 percent at stores open more than a year, while discounter Target saw same-store sales gain 4.5 percent and discounter Kmart had a 2.1 percent increase in sales.
In May and June, Australian households received handouts from the government to offset a carbon tax. (Reporting by Miranda Maxwell; Editing by Chris Gallagher)