Algeria's government said it would slash the cost of some staple foods on Saturday to try to quell four days of rioting, triggered by price rises, which killed two people and wounded several hundred.

Government ministers met to discuss how to respond to the unrest. As they did so, fresh protests broke out in two cities in Kabylie region east of Algiers, witnesses said by phone.

In its first detailed response to the worst rioting in energy exporter Algeria in years, the government said it would cut import duties and tax on sugar and cooking oil, focus of much of the anger over price rises.

The government also offered reassurances that it would not leave people at the mercy of rising food prices.

"Nothing can cast doubt on the resolute will of the state, under the direction of the president of the republic, to intervene whenever necessary to preserve the purchasing power of citizens in the face of any price increase," the official APS news agency quoted a government statement as saying.

Algeria, the world's fourth biggest exporter of natural gas, is emerging from nearly two decades of conflict between government forces and Islamist rebels which killed an estimated 200,000 people.

But analysts say this week's rioting is unlikely to escalate because Algeria has a weak opposition and, with foreign exchange reserves of about $150 billion, it can afford to cushion the impact of high commodity prices.

The United Nations' food agency said this week that world food prices hit a record high in December and some staples could climb even further.

In its statement, the Algerian government acknowledged world prices were a factor, but said they were not the sole explanation and also blamed players in the local supply chain for driving up prices.

It said its measures would cut sugar and cooking oil prices by 41 per cent, and that it would also suspend customs duties on sugar imports until the end of August.

TENSION IN THE AIR

Riot police used batons and tear gas to contain rioting which broke out in a working class neighborhood of the capital on Wednesday but has since spread elsewhere.

Witnesses in the Kabylie region, whose mountainous landscape is used as a hideout by al Qaeda's north Africa wing, told Reuters there had been rioting on Saturday in the cities of Bejaia and Tizi Ouzou.

Triggered by anger over prices, the nationwide unrest also appeared to feed off long-standing grievances about high youth unemployment and cramped housing conditions.

Interior Minister Daho Ould Kablia was earlier quoted by official media as saying that two people had been killed and 400 injured in protests across the country since Thursday.

Protesters ransacked government buildings, bank branches and post offices in several eastern cities, including Constantine, Jijel, Setif and Bouira, on Thursday night and Friday morning, the official news agency said.

"There is a lot of tension in the air. People are afraid. In my neighborhood, this morning there was no bread, no milk, nothing," said pensioner Abdallah Chiboub, 65, who lives in Bab Ezzouar, an eastern suburb of Algiers.

Abdelaziz Belkhadem, a senior politician who acts as a representative of the president, condemned protesters who seized the opportunity to loot and ransack buildings and shops.

He said Algeria was using its oil revenues to improve living standards for its 35 million people, but said this would take time because the conflict with Islamists had meant there had been no investment for years.

Neighboring Tunisia has seen a wave of rioting in the past few weeks over joblessness and living conditions, but there was no evidence of any link with the unrest in Algeria.