UPDATE 2-Chile November CPI unexpectedly falls 0.5 percent
* Market had expected flat November CPI * Month-on-month fall biggest since at least Nov. 2011 * Inflation in 12-mth to Nov 2.1 pct SANTIAGO, Dec 7 (Reuters) - Chile's consumer price index unexpectedly fell 0.5 percent in November, far below what the market expected, chiefly due to lower prices for transport, food and non-alcoholic beverages, the government said on Friday. The November CPI fall is the steepest monthly decline in that index in at least a year, according to the INE statistics agency. This follows a surprisingly high 0.6 percent rise in October and stronger-than-expected 0.8 percent increase in September. Analysts polled by Reuters had forecast zero inflation in November. Core inflation, which excludes fruits, fresh vegetables and fuel, was minus 0.2 percent in November, and inflation in the 12 months to November was 2.1 percent, well below the central bank's 3 percent policy target. "In November, 5 of the 12 components that make up the CPI basket clocked falls in their indexes and seven registered positive variations," the INE said. Chile's economy will expand about 5.5 percent this year, Finance Minister Felipe Larrain said on Wednesday, adding that he doesn't see the small, export-dependent economy overheating.