Consumer prices rose in February driven by high gas prices and an improving housing market.

Prices rose by 0.7 percent as measured by the Consumer Price Index, which tracks the average change in prices of goods and services purchased by households. Most of the rise was due to increased gas prices. The gasoline index rose 9.1 percent in February.

While gas was the primary engine driving up prices, it is not expected to have a lasting effect as prices have already started falling, said Ken Mayland, president of ClearView Economics.

“My impression, as a consumer who fills up his car on a regular basis, we are not seeing a sustained increase. We saw a big one-time jump,” said Mayland. “I’m not expecting it will have a major adverse effect on the consumer or their psyche.”

Gas prices rise annually in the early spring months when suppliers switch from winter to summer gasoline formulas. In past years, the transition has created spot shortages, which push prices up, said Mayland.

After removing volatile gas and food costs, prices rose by a manageable 0.2 percent, much of that driven by rising housing prices. The owner’s equivalent rent, which assigns a market rental rate to homeowners’ properties, increased steadily over the past several months, reflecting the strengthening real estate market.

Housing prices plummeted during the recession and are now on the rebound. The most recent Case-Shiller index, the leading measure of U.S. home prices, showed a 7.3 percent increase in home prices over 2012.

“The housing sector is in cyclical uptrend and a trend that has legs. We’re only at the start of it,” said Mayland.

The Case-Shiller Index is the leading measure of U.S. home prices. Prices fell dramatically after the 2007 recession and are only started to recover in 2012.

Tom Hennessy, a realtor in Raleigh, NC, has seen housing prices rise over the past few months in the area. The limited supply of houses on the market combined with increasing numbers of buyers in the area has pushed prices higher. In one recent sale, Hennessy received an offer over $2,000 above the asking price even before negotiations.

“It’s a unique time. There’s such low supply on the market. Inventory for homes, not just new homes, all homes, are at an all time low. And right now the spring market is just starting to pick up,” said Hennessy.

While part of the price increase is a natural backswing from the severe losses during the recession, there are signs of a sustained recovery. Walter Molony, head of economic issues for the National Association of Realtors, is optimistic that prices will continue upward as the supply of houses on the market remains below normal.

“The upside is that you have two million homeowners today that have positive equity in their homes that a year ago were upside down in their mortgage,” said Molony.

On the whole, home prices have been rising in the major cities across the U.S. — 18 of the 20 cities tracked by the Case-Shiller index posted gains. Only Chicago and New York declined. Phoenix, Detroit and Miami had the strongest gains.

While rising prices are lending a hand to homeowners, they may also point towards a loosening credit market.

Over the past three years, the Federal Reserve has been pumping money into the economy to keep interest rates low in the hope that banks will put that money in the hands of businesses and consumers.

However, the result is less than stellar. Banks are lending only to the top creditworthy consumers, many of which are not in need of extra money. Banks are sitting on their reserves rather than using common sense standards to approve new borrowers. Such standards would look beyond the credit score and into a borrower’s debt to income ratio, allowing lenders to make a realistic value judgment on an individual’s ability to repay.

This month’s CPI data represented the largest inflation increase in over a year, but it is still well below the Fed’s 2.5 percent target. This allows the Fed to continue their bond-buying program and maintain low interest rates. Though, Fed critics are concerned that when this money eventually makes its way into the system, inflation will take off far too quickly for the Fed to tame it.

Though, as Molony said, “All those piles of money sitting in banks aren’t doing anyone any good if they’re not out in the market working.”