KUNDUZ - Food was running short as Afghan forces battled Taliban militants for a third day in Kunduz Wednesday, residents said, with scores fleeing the strategic Afghan city fearing more violence.

Taliban militants on Monday launched an attack in Kunduz, briefly hoisting their flag at the main intersection, according to witnesses, before Afghan forces backed by NATO drove them into the outskirts.

Since late Monday Afghan forces have been conducting a careful clearing operation, with officials warning that the militants may be hiding in civilian homes as fighting continued around the city's edges.

"We are facing a shortage of food in the city. The prices are skyrocketing. A loaf of bread that cost 15 Afghanis ($0.22) is now 40 Afghanis ($0.60)," a resident, Khalid, told AFP.

"People have to wait in queues for hours behind bakeries to buy bread," he said.

Frightened citizens were still trying to flee amid unconfirmed reports the militants were building up their presence once more.

"Almost all the people in the city want to leave. I have been trying to find transportation for hours today, but all cars are full," Nasirullah, waiting in the bus station with his family of five, told AFP.

Khairuddin, a teacher in the city, said schools, universities and other private and public institutions were shut and residents were left without electricity as the main power station had been destroyed by militants.

"The few shops that are open are running out of food items.

 We don't know when the government is going to begin their clearance operation to push them (Taliban) completely out of the town," he said.  The main roads to the city are also cut off, he said.

But Mahmood Danish, spokesman to the Kunduz governor, said Afghan forces were moving slowly for fear of civilian casualties.

"We have not launched the major clearance operation yet, because the enemies are hiding in people's houses. But soon we will drive all of them out the city."

Last September, the Taliban briefly seized Kunduz capital for two days then withdrew from the outskirts on October 15. More than 280 people were killed and hundreds wounded.

Afghan President Ashraf Ghani is meeting world leaders at a conference in Brussels on Wednesday in a bid to secure financial aid from the international community up to 2020.

He told delegates the Kunduz attack had been launched to overshadow the conference, but that they "will not dent our will, diminish our resolve, or divert our focus".

"A war president was the last thing that I wanted to become but as the proud commander-in-chief of our forces I salute their will and their sacrifice," he added.

The meeting, 15 years after the US invasion of 2001, will try to drum up support despite donor fatigue compounded by conflicts in Syria and Iraq plus the worst migration crisis since World War II.