Dairy farmers say they are already being squeezed by the sales battle between Woolworths and Coles. Picture: Craig Greenhill Source: The Daily Telegraph

The supermarkets are now doing battle in the bathroom / AAP Source: AAP

Coles yesterday wiped up to a third off the cost of dozens of toilet rolls and paper towels.

Sorbent, Quilton, Purex, Handee Ultra and Coles brand product prices have dropped up to $4.85 a pack.

Rival Woolworths last night pledged to match the cuts.

"Where we do have the same sizes we will match. Where we have different pack sizes we will match them cent for cent, roll by roll, on the most comparable size," Woolies spokesman Benedict Brook said.

Coles' decision to slash the cost of its own brand milk late last month triggered a shootout with Woolworths and Aldi and outraged dairy farmers.

Parent company Wesfarmers yesterday revealed that the move was paying dividends at the checkout, with a big shift to the Coles brand, and overall milk sales growth of 15 to 20 per cent.

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Wesfarmers chief executive Richard Goyder denied the supermarket chain was trying to damage the dairy industry by cutting prices on its private label milk.

Mr Goyder said a big motivation was to increase the popularity of milk.

"This hasn't been in place for long, but the reaction we're getting from our customers is incredibly positive and our milk sales are up very strongly since this was put in place," Mr Goyder told media after the company delivered a 33 per cent increase in first half profit.

"There has been some shift to the Coles brand milk, as you would expect, but overall milk sales are strongly up.

"Our milk sales were up by 15 to 20 per cent since we put this in place.

"The aim is get price trust and I can tell you, customers love it."

A Coles spokesman said sales of competing branded milk were down, but "not significantly."

Coles brand butter and cream sales also have grabbed "double-digit" growth since price changes to beat or match its discontinued Smart Buy range were announced early this month.

Mr Goyder said there had been a move by consumers towards the Coles brand of milk, which accounted for about four per cent of all milk produced in Australia.

"There's been some shift, but in the scheme of things it hasn't been massive."

Mr Goyder said food inflation in Australia had reduced from about four per cent to 2 per cent in recent years.

"That's saving Australians significant amounts of money, as in a billion dollars a year or thereabouts."

The milk price blitz will be the subject of a Senate inquiry starting next month.