The worrying factor, however was manufacturing sector growth, which decelerated to 3.1 per cent in August from 5.5 per cent a year ago.
India's economic growth slipped to a three-year low of 5.7 per cent in the first quarter of the current fiscal, leading to calls by the industry for a rate cut.
However, the Reserve Bank at its policy review meeting earlier this month kept the key interest rate unchanged at 6 per cent, citing upward trend in inflation.
Factory output growth measured in terms of Index of Industrial Production (IIP) rose in August mainly on account of improvement in performance mining, electricity and capital goods.
The IIP growth stood at 4 per cent in August 2016, as per data released by the Central Statistics Office (CSO). The previous high in IIP growth was recorded at 5.1 per cent in November 2016.
IIP growth during April-August period of this fiscal stood at 2.2 per cent, down from 5.9 per cent in the same period in 2016-17.
The output growth in manufacturing sector, which constitutes 77.63 per cent of the index, however decelerated to 3.1 per cent in August from 5.5 per cent a year ago.
Meanwhile, the July IIP number was revised to 0.94 per cent from 1.2 per cent provisional estimates released last month.
The output of the mining and electricity sectors grew at 9.4 per cent and 8.3 per cent as compared to August 2016.
As per use-based classification, the growth rates in August 2017 over August 2016 are 7.1 per cent in primary goods, 5.4 per cent in capital goods, (-) 0.2 per cent in intermediate goods and 2.5 per cent in infrastructure/ construction goods.
The consumer durables and consumer non-durables sectors recorded growth of 1.6 per cent and 6.9 per cent, respectively.
In terms of industries, 10 out of 23 industry groups in the manufacturing sector showed positive growth during August 2017.
As per Consumer Price Index (CPI) data, retail inflation came in at 3.28 per cent in September, unchanged from August, despite softening of vegetable and cereal prices.
Retail inflation stood at 4.39 per cent in September 2016.
The Central Statistics Office (CSO) also revised downwards the August inflation print to 3.28 per cent from 3.36 per cent.
Overall food inflation moderated to 1.25 per cent in September from 1.67 per cent in the previous month.
The rate of price in vegetables softened to 3.92 per cent (from 9.97 per cent in August). On the other hand, the inflation print rose in the fuel and light category to 5.56 per cent. It was 3.66 per cent in August.
Among others, inflation in fruits, meat & fish, and prepared meals quickened during the month. Rate of price rise in pulses continued with deflationary trend at (-) 22.51 per cent while egg prices fell by 0.15 per cent.