Algeria debates food price cuts to quell riots

By Lamine Chikhi

ALGIERS | Sat Jan 8, 2011 6:40am EST

ALGIERS (Reuters) - The Algerian government was due to hold a special meeting on Saturday to consider steps to reduce soaring food prices, in an effort to quell violent protests which have broken out across the country.

Algerians have taken to the streets since Wednesday in protest against high unemployment and food price inflation which has seen the cost of staple products like sugar, cooking oil and flour double in recent months.

Authorities are expected to announce measures such as limits on the profit margins traders can make on staple foods.

Fresh rioting broke out in several provinces on Friday. Police were deployed near mosques and authorities suspended soccer matches to try to quell the violence.

According to security sources, two young men were killed on Friday in the cities of Msila, about 250 km (155 miles) southeast of Algiers, and Bou Ismail, 50 km (31.07 miles) west of the capital.

The official APS news agency said 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.

"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 east of Algiers.

President Abdelaziz Bouteflika, serving his third term, has not made any public comment on the riots. Trade minister Mustapha Benbada has said urgent measures will be taken to alleviate pressure on the population.

"From the start of next week, the situation will get better," Benbada was quoted as saying by state radio.

The government is expected to impose fixed profit margins on widely-consumed goods including edible oil and sugar. The cost of flour and salad oil has doubled in the past few months, reaching record highs, while 1 kg of sugar, which a few months ago cost 70 dinars (27 U.S. cents), is now 150 dinars.

Unemployment stands at about 10 percent, the government says. Independent organisations put it closer to 25 percent. Official data put inflation at 4.2 percent in November.

With oil prices at around $90 a barrel, energy exporter Algeria can afford to spend more on subsidies to overcome the crisis. Its foreign exchange reserves hit $155 billion by the end of 2010.

(Editing by Myra MacDonald)