NEW DELHI—India's industrial output grew less-than-expected in September despite hopes of higher consumer demand ahead of the festival season and strong performances in some infrastructure sectors.
 
The index of industrial production in September rose 2.0% from a year earlier, data from the statistics ministry showed Tuesday. The reading fell short of market expectations, which was for a 3.6% expansion, according to the median forecast in a poll of 19 economists by The Wall Street Journal. 

The government also revised marginally lower the reading for August to a 0.4% expansion from 0.6% reported earlier. 

India's industrial production has declined in two of the six months in the current fiscal year that began in April, after a weak 1.1% increase in the last fiscal year. 

Economists blame high borrowing costs, because of the central bank's efforts to control inflation, for sapping consumer demand as well as choking investments by businesses.


Poor infrastructure facilities such as potholed roads, crowded ports and airports as well as a slow change in policies needed to facilitate business are further hampering industrial growth. 
 
Tuesday's data show manufacturing output, which has a 75% weight in the IIP, rose 0.6% from a year earlier in September. Mining output rose 3.3% from a year earlier while electricity output grew a robust 12.9%. 
 
Government data issued late October had shown output of India's eight infrastructure industries grew 8.0% from a year earlier in September, the strongest expansion in a year. The strong infrastructure output reading had bolstered expectations of a significant improvement in industrial production.

Meanwhile, consumer inflation accelerated to 10.09% from 9.84% in September, according to separate government data issued Tuesday. October's reading was the highest in seven months, and it also overshot the median estimate of 9.9% in another poll of 16 economists.
 
The inflation reading would add pressure on India's central bank to raise rates again next month. The Reserve Bank of India raised its key policy rate in September and October to control inflation despite a sharp slowdown in economic growth.



Write to Anant Vijay Kala at anant.kala@wsj.com and Mukesh Jagota at mukesh.jagota@wsj.com