Harare  - The cost of living in Zimbabwe edged down by one per cent in August, as locally-manufactured goods began to return to supermarket shelves, the Consumer Council of Zimbabwe (CCZ) reported Wednesday.

CCZ director Rosemary Siyachitema said the average basket of goods for a poor family dropped to 495 US dollars last month, while the cost of food alone fell 4 per cent.

Siyachitema said buying domestic Zimbabwean products would help develop local industry, and that with increased production, home- grown prices would come down and become competitive with imported goods.

Zimbabwe's economy collapsed last year as annual inflation hit 500 billion per cent and the national currency plunged to 10 trillion Zimbabwe dollars to 1 US dollar.

Goods disappeared from the market as businesses were forced by price controls under the regime of President Robert Mugabe to sell goods for less than it cost them to produce.

Following the inauguration in February of a coalition government between Mugabe and the then opposition leader Morgan Tsvangirai, price controls were abolished, the Zimbabwe dollar was withdrawn and the US dollar was declared legal tender.

Supermarkets and stores quickly filled with goods, although nearly all were expensive imports - while local manufacturers struggled to resume production.

Economists say local basic goods such maizemeal, bread, cooking oil, matches and toilet paper are back on sale now for the first time in over a year.  dpa