Percentage Points vs Percent: What is the Difference?

A politician steps up to a podium and announces that unemployment has fallen from 8% to 6%. The next morning, one newspaper headline reads: "Unemployment down 25%." Another reads: "Unemployment falls by 2 percentage points." Both headlines are reporting the same event. Both are mathematically correct. And yet they tell a very different story.

This is the percentage points vs percent problem, and it trips up journalists, politicians, and business leaders every day. Once you understand the difference, you will spot it everywhere: in budget speeches, mortgage rate announcements, election coverage, and pay rise negotiations. It takes about five minutes to learn and it is worth knowing.

Percentage points: the simple definition

A percentage point is simply the gap between two percentages. Work it out by subtraction.

If interest rates rise from 3% to 5%, they have risen by two percentage points. That is it. No formula, no complication. You take one percentage, subtract the other, and the result is the number of percentage points by which they differ.

Think of it like measuring distance on a number line. If a value moves from the 3% mark to the 5% mark, the distance it travelled is two percentage points. The word "percentage" is part of the unit, in the same way that "kilometres" is the unit when you measure a road.

When someone says "percentage points," they are always referring to this raw, literal gap between two percentages.

How percentage change works

A percentage change measures something different: not the raw gap, but how large that gap is relative to where you started.

To calculate it: take the new value, subtract the old value, divide by the old value, and multiply by 100.

Using the same interest rate example, where rates rose from 3% to 5%: (5 minus 3) divided by 3, multiplied by 100 = 66.7%. So interest rates rose by two percentage points, but they also rose by 66.7%. Both statements are true. The first tells you the size of the move in absolute terms. The second tells you how significant that move was relative to the starting point.

This is why the same event can produce headlines that look wildly different. A two percentage point change sounds modest. A 66.7% change sounds dramatic. Choosing which one to report, and leaving out the other, is one of the oldest tricks in the book.

Why it matters

This is not an abstract grammar problem. The distinction between percentage points and percentage change has real consequences for how people understand money, politics, and risk.

Mortgage interest rates

When the Bank of England raises its base rate by one percentage point, from 4% to 5%, that is not a 1% increase in what you pay. On a £200,000 repayment mortgage, a one percentage point rise adds roughly £2,000 to your annual interest bill.

If a lender advertised this as "just a 1% rise," they would be obscuring the true cost. The accurate description is "a one percentage point rise," which, relative to a starting rate of 4%, is actually a 25% increase in the rate itself.

Polling and elections

A political party's vote share rises from 20% to 24%. In percentage point terms, that is a gain of four percentage points. In percentage change terms, that is a 20% increase in their share of the vote. Both are legitimate ways to describe the result, but they carry very different emotional weight. A campaign that "gained 20% more votes" sounds like a surge. "Up 4 points" sounds like a steady improvement. The choice of framing shapes public perception.

Inflation and pay

If inflation rises from 2% to 4%, it has risen by two percentage points. But it has also doubled: a 100% increase. A worker whose pay rise keeps pace with the old inflation rate of 2% is now falling behind by two percentage points. Their employer might describe this as "a small gap." In relative terms, half the inflation rate has effectively eaten into their real pay. The framing changes everything.

How to tell which one is being used

The good news is that careful writers do signal which measure they are using, even if many do not.

If you see the phrase "percentage points" written out in full, the speaker is referring to the raw arithmetic difference between two percentages. This is the more conservative, more specific framing.

If you see "percent more," "percent higher," "a X% increase," or "rose by X%," the speaker is referring to the relative change, which uses the starting value as the reference point.

The problem arises when neither is specified: when a headline simply says "unemployment is down 2%" without clarifying whether that means 2 percentage points or a 2% relative fall. In that case, the two interpretations produce entirely different numbers, and you are right to be suspicious. If it matters to you, find the original data and calculate it yourself.

A useful rule: when dealing with percentages that are themselves measures (interest rates, unemployment rates, poll ratings, tax rates), always prefer "percentage points" for the raw gap, and "percent" only when explicitly describing the relative change.

At a glance: three examples

Quick reference

• A percentage point is the raw difference between two percentages: work it out by subtraction.
• A percentage change measures how large that difference is relative to the starting percentage.
• The two measures always describe the same event but produce different numbers, sometimes dramatically so.
• When the phrasing is not clear in a report or announcement, find the original figures and check both calculations yourself.

Last reviewed: 7 May 2026