(Reuters) - General Mills topped market expectations for third-quarter sales and profit on Wednesday, backed by higher prices for its breakfast cereals, snack bars and pet food products that helped cushion a blow from slowing demand.

Shares of the packaged food maker rose about 3% in premarket trading after it reaffirmed its annual sales and profit targets for a third time this year.

The last two years have seen staple food makers, including General Mills, reap the benefits of consistent price hikes that helped shield their profit margins from spiraling raw materials, labor and supply chain costs, while seeing very little pushback from consumers.

However, sticky inflation and higher borrowing costs have now made customers more cautious with spending on expensive branded products and focus on buying cheaper private-label alternatives that are gaining more shelf space at retailers.

General Mills' gross margins rose 100 basis points year-on-year to 33.5%, helped by an increase in organic average selling prices in the third quarter.

Still, the company's quarterly organic volumes declined, joining peers such as Kraft Heinz in seeing softer demand.

The Minnesota-based company had most recently maintained its forecast in February, having previously reiterated it in September.

In the third quarter, the company also recorded $31 million of net recoveries related to a voluntary recall of certain international Häagen-Dazs ice cream products in fiscal 2023.

Its net sales dropped about 1% to $5.1 billion in the third quarter, compared with analysts' expectations of sales to drop about 3.1% to $4.97 billion, according to LSEG data.

Excluding one-off charges, General Mills earned $1.17 per share in the quarter ended Feb. 25, compared with estimates of $1.05.

(Reporting by Granth Vanaik in Bengaluru; Editing by Shweta Agarwal)