Percentage change vs percentage points
When an interest rate rises from 4% to 5%, news reports might call it a 1% rise, a 25% rise, or a one-point rise. Two of those are correct, and they describe different things.
Percentage points measure the gap
A percentage point is the simple difference between two percentages. From 4% to 5% is a rise of 1 percentage point, because 5 − 4 = 1. Use percentage points whenever you compare two rates, shares or probabilities directly.
Percentage change measures the growth
Percentage change compares the difference to where you started. The rate went up by 1 point from a base of 4, and 1 ÷ 4 = 0.25, so the rate increased by 25%.
Mortgage rate: 4% → 5% Difference: 5 − 4 = 1 percentage point Change: (5 − 4) ÷ 4 × 100 = 25% increase
Why the difference matters
Saying a rate “rose 1%” is ambiguous. A reader could take it to mean 4% became 4.04%, which is a 1% increase, rather than 5%. Small rates make the gap dramatic: a risk going from 0.1% to 0.2% is only 0.1 points, but it doubles, a 100% increase. Both statements are true, and quoting only one can mislead.
- Unemployment falling from 6% to 5% is a 1-point fall and a 16.7% fall.
- A party’s vote share going from 30% to 33% is a 3-point gain and a 10% increase.
- A test pass rate going from 80% to 88% is an 8-point rise and a 10% rise.
A quick rule
If you subtract two percentages, the answer is in percentage points. If you divide the difference by the starting value, the answer is a percentage change. The percentage calculator’s change row does the second calculation for you.
Frequently asked questions
Is “basis point” the same thing?
A basis point is one hundredth of a percentage point. A rise from 4.00% to 4.25% is 25 basis points.
Can a percentage change be larger than 100%?
Yes. Going from 2% to 6% is a 4-point rise and a 200% increase.