The August inflation number is the highest since March 2017, when it was recorded at 3.89 per cent.
Ben Brettell, senior economist, at Hargreaves Lansdown said: "It looks likely that inflation will fall back in the coming months, as the effect of Brexit-induced sterling weakness falls out of the year-on-year calculation".
Among the CPI components, inflation of food and beverages accelerated to 1.96% in August 2017 from 0.43% in July 2017 mainly contributing to the increase in CPI inflation.
The UK's Consumer Price Index rose to 2.9%, well above the Bank of England's target of 2%, reaching levels last seen in April 2012.
The ONS added that airfares rose at a slower pace than a year earlier, which weighed on the price increase a little.More news: OPEC ups forecasts for global oil demand for 2017
Including owner-occupiers' housing costs, CPI was 2.7 per cent, up from 2.6 per cent in July.
Clothing and footwear prices had the biggest impact on the inflation rate last month, according to the ONS. "Rates are a racing certainty to be left on hold at this week's meeting [on Thursday], but as ever the minutes will be closely scrutinised for clues as to committee members' latest thoughts". With the rate of inflation rising sharply, investors are likely anticipating the UK's first interest rate hike in a decade, could come sooner than expected.
Meanwhile the United States dollar may slip later this afternoon with the release of the latest JOLTs job data, with an expected dip in job openings in July likely to weigh on market sentiment. Retaining its neutral stance, RBI pinned future action on data, saying that wanted more confidence that inflation would move "close to 4 per cent on a durable basis".
That detail, combined with an uncertain economic outlook, makes the BOE's job much harder than just balancing the level of inflation.