President Mugabe has ordered businesses to cut the price of bread, milk and other basic items as Zimbabweans prepare to vote in general elections, state media reported today.

The country is suffering from extreme inflation, with price increases running at 100,000 per cent a year, the highest rate in the world. One million Zimbabwean dollars are currently worth around one penny, and shops often raise prices several times a day.

In an apparent attempt to create a feelgood factor among his suffering voters ahead of Saturday's elections, Mr Mugabe has ordered prices to be returned to their levels of February 12, the date when teachers and other state workers received pay rises.

"We are going to read the riot act to them (businesses)," Mr Mugabe told a political rally yesterday in Hwange, in the north-west of Zimbabwe, according to the state-run Herald newspaper.

"We want them to reduce prices to those which were in effect before the salary hikes."

The President said that he would threaten businesses with nationalisation if they did not comply.

"We are meeting with them in Harare... If they refuse, we will also not co-operate. We are going to use the Indigenisation and Empowerment Act, which stipulates that all companies, be they mines or manufacturing companies, with foreign ownership, without black shareholders or with black shareholders without a majority, should have at least 51 per cent of shares reserved for indigenous people."

Mr Mugabe says that the price increases are part of a plot by opposition activists to discredit his ruling Zanu-PF party. He accuses Britain and other Western powers of funding the opposition.

His critics retort that he has mismanaged the Zimbabwean economy and has no solutions for an crisis of his own making, in a country that was once one of the most solvent in Africa and a major exporter of food.

Now, farm production has plummeted and the Zimbabwean currency is too weak to allow the government to buy from abroad.

The last time that Mr Mugabe attempted to intervene was last June, when he demanded that the price of bread and other goods and services should be halved. The move was welcomed at first by Zimbabweans, but was soon seen as having backfired when supermarket shelves quickly emptied and were not restocked.

In the ensuing crackdown more than 12,000 shopkeepers and manufacturers were arrested.

Mr Mugabe, 84, who has been in power since 1980, hopes to win a sixth term of office in Saturday's general election. He is being challenged by Simba Makoni, his former finance minister who has quit Zanu-PF to run as an independent, and by Morgan Tsvangirai, the leader of the Movement for Democratic Change. All the candidates have promised to end Zimbabwe's economic crisis.

Opposition leaders have accused Mr Mugabe of trying to buy the election, by handing out equipment to poor black farmers at election rallies and inaugurating new public buses at Zanu-PF campaign events.

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