Percent (%) vs Percentage Point (%p) — What's the Difference?
An interest rate going from 3% to 4% is a 1 percentage point rise and also a 33.3% rise. How the two expressions differ and how to avoid confusing them in news and reports.
When a central bank raises its policy rate from 3.00% to 3.25%, the news reports a '0.25 percentage point (0.25%p) hike'. Calling it a '0.25% hike' would mean something completely different. When a rate changes into another rate, there are two ways to describe the change.
Two kinds of change
- Percentage points (%p): simply subtract one rate from the other. 4% − 3% = 1%p
- Percent (%): the change as a ratio of the starting rate. (4 − 3) ÷ 3 × 100 = 33.3%
Both are correct, but their sizes are completely different. That is why you must always make clear which one you mean.
Examples
- Unemployment 4.0% → 3.6%: down 0.4%p, a 10% fall in relative terms
- Approval rating 40% → 44%: up 4%p, a 10% rise in relative terms
- Deposit interest rate 2% → 3%: up 1%p, and interest income rises 50%
- Defect rate 0.2% → 0.1%: down 0.1%p, and defects are cut in half (a 50% drop)
As the last example shows, with small rates a %p difference may look tiny while the relative change is very large.
Which one should you use?
- When the rate itself is the indicator — interest rates, tax rates, unemployment, approval ratings, market share — the standard is to express changes in %p.
- When you want to say how the size of an actual outcome changed — interest income, tax burden, number of defects — use the relative change (%).
- Giving both is the least likely to be misunderstood. Example: 'market share rose from 12% to 15%, up 3%p (25%)'
Common misunderstandings
- 'The tax rate went up 2%, from 10% to 12%' → strictly a 2%p increase, and the tax paid rises 20%.
- 'The return went up 5%, from 5% to 10%' → 5%p, and in relative terms it doubled (a 100% increase).
- Ads and articles sometimes turn a small %p change into a large % change (or the reverse) to shape the impression, so check the basis.
The same applies to probabilities
If a risk rises from 1% to 2%, you can call it 'double the risk (a 100% increase)' or 'a 1%p increase'. When medical or statistical articles stress only the relative risk (%), the fact that the change in absolute risk is small can be hidden.
Try it in the calculator
Enter the before and after rates in the %p tab to see the percentage-point difference and the relative change side by side.