VILNIUS/RIGA, Nov 9 (Reuters) - Lithuania and Latvia consumer prices continued to ease in October, statistics data showed on Monday, with Latvia recording its first annual decline in its consumer price index (CPI) since 1991.
Both Baltic countries remain mired in a deep recession after years of strong growth, with growing unemployment and wage cuts pushing domestic consumption and prices down.
Latvian consumer prices fell 0.9 percent year-on-year in October from a rise of 0.5 percent in September.
"The CPI has recorded the decrease, compared to the same month of the previous year, for the first time since 1991 when regular CPI compilation was launched," the statistics office said in a statement.
Latvia's prices fell 0.2 percent month-on-month, same rate as the previous month, mostly due to price decrease of fuel, heating and package holidays.
The data was on a par with the median of a Reuters survey.
"We can see that the deflation scenario is working. Prices are coming down. In the future we will certainly have deflation," Martins Kazaks, an analyst at the Swedbank in Riga, said.
Lithuania annual inflation eased to 1.3 percent in October from 2.7 percent a previous month, the statistics office said on Monday.
Consumer price rises, which thwarted Lithuania's plans to join the euro zone in 2007, have been mostly easing since hitting a peak of 12.5 percent in June 2008.
Month-on-month, Lithuania CPI fell 0.4 percent in October after a rise of 0.6 percent in September.
The prices were down also due to lower cost of utilities, and the fall in food products and leisure costs, the statistics office said.
The analysts said the price rise in September was due to increase in the value added tax (VAT) rate to 21 percent from 19 percent, but it's effects were short-lived.
The median forecast in a survey of six analysts was for prices to remain unchanged on a monthly basis and annual inflation of 1.7 percent in October.
Latvia's gross domestic product (GDP) contracted a preliminary 18.4 percent in the third-quarter from a revised fall of 18.7 percent a previous quarter, as domestic consumption has stalled and export markets have shrank.
Latvia took a rescue package of 7.5 billion euros from the International Monetary Fund and the European Union to keep its currency, the lat, stable and pegged to euro.
Lithuania has avoided asking for international assistance so far, and the central bank governor told Reuters on Monday it should be able to solve its own problems.
But he also added: "I would not see anything wrong, if Lithuania used the IMF assistance."
(Reporting by David Mardiste and Jorgen Johansson in Riga; Writing by Nerijus Adomaitis; Editing by Ron Askew) Keywords: LITHUANIA INFLATION/

(nerijus.adomaitis@reuters.com; +370 641 913 86; Reuters Messaging: nerijus.adomaitis.reuters.com@reuters.net)

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