goods and services 1. 7 % [ 2. 8 % ]. however, on an annual basis, non - food inflation increased to 12. 5 % from the 11. 8 % registered in june 2010. this was due to higher annual inflation rates for the following subgroups : clothing and footwear by 11. 3 %, [ 9. 9 % ] 4 ; furniture and household goods 11. 5 %, [ 10. 1 % ] ; transport and communications 15. 3 %, [ 11. 1 % ] ; and other goods and services 14. 1 %, [ 12. 8 % ]. these developments reflected pass - through effects of the kwacha exchange rate depreciation by 4. 8 % over the 12 month period, coupled with higher transport fares and the upward adjustment of electricity tariffs by an average of 25. 6 % during the period under review. non - food inflation contributed 6. 3 percentage points to the annual overall inflation outturn. the numbers in square brackets are for june 2010. broad money and domestic credit 5 preliminary estimates indicate that growth in broad money ( m3 ), comprehensively defined to include foreign currency deposits, was 7. 2 % in the third quarter of 2010 down from 13. 3 % as at end - june 2010, and was above the 4. 0 % projected quarterly growth rate. in absolute terms, m3 is estimated to have increased to k17, 898. 9 billion from k16, 698. 3 billion in june 2010. the outturn in m3 was largely due to the increase in both nda and nfa. nfa edged up by 12. 2 % mainly on account of a 15. 7 % increase in gross international reserves to us $ 1, 972. 0 million as at end - september 2010. the increase in nda was mainly due to the expansion in lending to the government. excluding foreign currency deposits that increased by 30. 2 % ( june 2010, fell by 5. 1 % ), money supply declined by 2. 0 % compared to the 22. 9 % growth recorded during the second quarter of 2010. on an annual basis, m3 growth increased to 32. 0 % in september 2010 from 27. 7 % in june 2010. this outturn was due to the rise in nda by 96. 9 % ( june 2010, rose by 58. 2 % ) primarily on account of increased lending to government. however, the nfa fell by 9. 8 % compared with a fall of

1. 2 % recorded in june 2010. excluding foreign currency deposits that grew by 29. 8 % ( june 2010, fell by 5. 9 % ), money supply growth was 33. 2 % from the 49. 0 % recorded in june 2010. total domestic credit, comprehensively defined to include foreign currency loans, increased by 3. 1 % at end - september 2010 compared with 10. 1 % growth registered in the second quarter of 2010. this was mainly due to a 4. 4 % rise in net claims on central government that contributed 1. 7 percentage points to the growth in domestic credit. similarly, lending to the private sector ( including public enterprises ) grew by 2. 2 % and contributed 1. 4 percentage points to the total domestic credit outturn. excluding foreign currency denominated credit, which fell by 4. 1 %, domestic credit increased by 5. 2 % compared to the 7. 5 % registered in june 2010. on an annual basis, domestic credit growth at 13. 5 % in september 2010 was 10. 1 percentage points lower than 23. 6 % recorded in june 2010. this largely reflected a slowdown in credit to the private sector, including public enterprises, to 0. 7 % compared with the 25. 9 % growth recorded in june 2010. this outturn contributed 0. 4 percentage points to the total domestic credit growth in the quarter under review. however, lending to the government increased by 41. 7 % from 108. 9 % in june 2010 and contributed 13. 1 percentage points to the total domestic credit growth. on a sectoral basis, households ( personal loans category ) continued to account for the largest share of outstanding credit, accounting for 26. 3 % ( 26. 2 % ) 6 in september 2010. the agricultural sector was second at 17. 1 % ( 18. 5 % ), followed by manufacturing 13. 4 % ( 13. 0 % ), wholesale and retail trade, 12. 0 % ( 11. 7 % ), transport, storage and communications, 5. 3 % ( 5. 4 % ) and real estate, 5. 4 % ( 5. 2 % ). interest rates demand for government securities remained strong although it was relatively lower during the quarter under review. the average rate of subscription at the treasury bill tenders was recorded at 123. 7 % down from 129. 5 % in the preceding period. similarly, the average rate of subscription rate for government bonds was down at 123. 5 % compared with 126