The Swedish diplomat, who took up the post in September, made the comments during a visit to Taez in the war-torn country's southwest.
As he wrapped up talks with Taez's governor and other political leaders, the coalition claimed another heavy death toll among rebels fighting to seize Marib in the north.
As well 115 Houthis killed, 19 rebel vehicles were destroyed in coalition strikes over the past 24 hours in Sirwah, west of Marib city, and Al-Jawf to the north, it said in a statement carried by the official Saudi news agency SPA.
Grundberg said, "military operations (are) causing significant casualties, which are exacerbating the humanitarian situation and undermining peace efforts".
"Working for peace in Yemen is an uphill battle," he added while holding out hope of a breakthrough.
"We should never forget that there is always a way to break the cycle of violence. There are always opportunities for peaceful dialogue."
The coalition has since October 11 issued near-daily reports of bombing around Marib, saying it has since killed more than 2,500 insurgents.
Marib, capital of the oil-rich province of the same name, is the internationally recognised government's last bastion in northern Yemen.
The Iran-backed Shia Houthis began a major push to seize the city in February and, after a lull, they renewed their offensive in September.
Grundberg also offered his condolences after a rebel mortar attack last month on Taez, Yemen's third city, left six children dead or critically injured.
"Again, as elsewhere in Yemen, it is the civilians that bear the burden of this conflict," he said.
The coalition intervened in Yemen in 2015 to shore up the government, a year after the Houthis seized the capital Sanaa.
Tens of thousands of people, mostly civilians, have since been killed and millions displaced in what the United Nations calls the world's worst humanitarian crisis.
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