* January CPI rises 0.2 percent, market expected no change * Chile CPI unchanged in December, fell 0.5 pct in November * Transport, housing, water, electricity, fuel prices rise * Air fares, financial services costs fall markedly * CPI rise in 12 months to January below central bank target By Anthony Esposito and Moises Avila SANTIAGO, Feb 8 (Reuters) - Chile's consumer price index posted a 0.2 percent rise in January, defying expectations for no change, as higher housing, water, electricity and fuel costs more than offset a pronounced fall in air fares and financial services, the government said on Friday. Chile's CPI was unchanged in December following a 0.5 percent fall in November and a 0.6 percent rise in October. "In January, nine of the 12 divisions that make up the CPI basket posted increases in their indexes, while three posted negative variations," the government's INE statistics agency said in its inflation report. Among categories which fell markedly in price in January in a sector called diverse goods and services were financial service costs, which declined 6.4 percent, due to a cut in taxes levied on credit, INE said. Air fares fell 11 percent. Prices also fell for clothes and footwear, used cars, computers and liquefied gas. Inflation in the 12 months to January was 1.6 percent, remaining well below the central bank's estimate for a 2.9 percent annual CPI rate by year-end. Chile's CPI rose 1.5 percent in 2012. "We believe that an important part of the (CPI's) variation in January should be transitory and will correct in the month of February ... We have a preliminary forecast of a -0.1 percent CPI for February," brokerage IM Trust said in a note to clients. Core inflation was 0.1 percent in January. Core CPI in the 12 months to January was 1.4 pct. Elsewhere in the region, Mexico's annual inflation rate cooled for the fourth month in a row in January to its lowest in more than a year but the higher-than-expected reading weakened bets on an imminent interest rate cut. Inflation in Brazil rose faster than expected in the month to mid-January, inching dangerously close to the ceiling of the central bank's official target range though probably not enough to force the bank to raise interest rates from a record low. Chile's central bank has kept rates steady since a surprise cut in January 2012 as it weighs external risks against a buoyant domestic economy. Thanks to robust domestic demand and investment, Chile's small, export-dependent economy has mostly fared better than expected despite slowing demand from top trade partner China and fallout from the euro zone crisis. The bank is expected to keep the key interest rate steady at the current 5.0 percent at its meeting on Thursday, but then hike it to 5.25 percent in 12 months, the bank's fortnightly poll of traders showed last month. "We think this (CPI) result could put pressure on the bank to discuss the option of a 25 basis point rate hike at its next rate-setting meeting, though we rule out a hike actually happening," Banchile Inversiones said in a note to clients. The Andean country's economy is believed to have expanded roughly 5.5 percent last year, according to government projections.