Percentage Change vs Percentage Points: What Is the Difference?
This confusion comes up constantly in news articles, financial reports, and political speeches. Two statements that both sound like they are describing the same thing are actually describing something quite different. Getting this distinction wrong either leads to misunderstanding data or, when it is done intentionally, misleading an audience.
The Definition of Each
A percentage is a number expressed as a fraction of 100. 25% means 25 out of every 100. It describes a proportion.
A percentage point is simply the arithmetic difference between two percentage figures. If a tax rate increases from 20% to 23%, it increased by 3 percentage points. This is a straightforward subtraction of two percentages.
Percentage change describes how much something changed relative to its original value, and is itself expressed as a percentage. The same tax rate increase from 20% to 23% represents a 15% change in the rate. Why? Because (23 - 20) / 20 x 100 = 15%.
A Concrete Example Where the Difference Really Matters
Imagine a bank announces that its customer satisfaction score rose from 60% to 66%. A headline might say "Customer satisfaction up 10%" or it might say "Customer satisfaction up 6 percentage points." Both headlines are technically accurate but they describe different things.
The 10% figure is the percentage change: (66 - 60) / 60 x 100 = 10%. The satisfaction score grew by 10% relative to where it started.
The 6 percentage points figure is the percentage point change: 66% minus 60% = 6 percentage points. The score is now 6 percentage points higher than before.
Neither is wrong. But they answer different questions. The percentage point change tells you how the score moved on the scale itself. The percentage change tells you how large that movement was relative to the starting point.
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Where the Confusion Gets Used Deliberately
This distinction is occasionally exploited when people want to make a change look large or small on purpose. A politician whose approval rating rose from 30% to 33% could say either "my approval is up 3 percentage points" or "my approval is up 10%." The 10% sounds much more impressive even though the actual movement on the scale was small.
Conversely, a company whose fees increased from 1% to 2% might describe it as "just a 1 percentage point increase" even though the fee literally doubled, a 100% increase in the cost.
When you see a percentage figure in news coverage, it is worth asking: is this describing a percentage point change or a percentage change? The answer completely alters what the number means.
Interest Rates: A Classic Case
Interest rate discussions are particularly prone to this confusion. When a central bank raises interest rates by 0.25%, the headlines often describe this as "a 0.25 percentage point increase" because that is the precise description. On a mortgage rate of 5%, a 0.25 percentage point increase brings it to 5.25%, a 5% increase in the rate itself.
For a $300,000 30-year mortgage, that 0.25 percentage point rate increase translates to roughly $50 more per month and about $18,000 more in total interest over the life of the loan. Small percentage points can have large financial consequences over long timeframes.
Quick Reference Guide
Approval rating goes from 40% to 44%: 4 percentage points up, 10% increase.
Unemployment falls from 8% to 6%: 2 percentage points down, 25% decrease.
Interest rate rises from 3% to 4.5%: 1.5 percentage points up, 50% increase.
Pass rate improves from 75% to 90%: 15 percentage points up, 20% increase.
Frequently Asked Questions
Which should I use when writing a report?
Use percentage points when you are describing how a percentage figure itself changed on its own scale. Use percentage change when you are comparing the magnitude of a change relative to the starting value. In most financial and academic writing, being explicit about which you mean is always clearer than leaving it ambiguous.
Is it wrong to say "the approval rating increased by 10%" if it went from 60% to 66%?
It is not technically wrong but it is potentially misleading because a reader might interpret "10%" as meaning the approval rating is now 70% (60 plus 10). The percentage change calculation ((66-60)/60 x 100 = 10%) is accurate but the phrasing can confuse. Writing "the approval rating rose from 60% to 66%, a 10% increase relative to its previous level" is more precise.
In everyday conversation which term should I use?
Percentage points are almost always clearer for everyday conversation when comparing two percentage values. If mortgage rates rose from 5% to 7%, saying "rates are up 2 percentage points" is instantly understood by almost anyone. Saying "rates rose 40%" requires the listener to work out that you mean 40% of the original 5%, which takes a mental step they may not take correctly.
What is a basis point?
A basis point is 0.01 of a percentage point, or one hundredth of one percent. They are used primarily in finance when discussing small changes to interest rates, bond yields, or spreads. A 25 basis point rate increase equals a 0.25 percentage point increase. The term exists to avoid ambiguity when very small rate moves matter significantly.