An interest rate moves from 2% to 3%. It rose by one percentage point. It also rose by 50%.
Both are correct. They measure different things, and the difference between them is where a great deal of misleading reporting lives.
The two measurements
- Percentage points — subtract one percentage from the other. 3% − 2% = 1 point.
- Percent change — measure that gap against where you started. 1 ÷ 2 = 50%.
The gap between the two numbers grows as the starting value shrinks. From 2% to 3% is one point but 50%. From 60% to 61% is also one point, but only a 1.7% increase.
This is why small rates produce such dramatic-sounding headlines. A rate rising from 0.5% to 1% has “doubled” — and moved half a point.
How it gets used
Both framings appear constantly, and the choice is rarely accidental.
“Unemployment rose 50%”
Sounds like a catastrophe. Could mean it went from 2% to 3%.
“Unemployment rose by one point”
Sounds minor. Same event.
Neither statement is false. The one that gets published depends on the story being told, which is why the distinction is worth carrying around with you.
The tell
If a report says “rose by 3%” about something that is itself a percentage — an interest rate, an unemployment figure, a tax rate, a market share — it is genuinely ambiguous, and often deliberately so.
Careful writing uses “percentage points” or “pp” when it means the arithmetic gap. Sloppy or motivated writing uses bare “percent” for both and leaves you to guess.
When you cannot tell, look for the underlying numbers. If they are not given, treat the claim as unverifiable.
Basis points
Finance solved this by inventing a unit that cannot be confused with anything.
A basis point is one hundredth of a percentage point. 100bps = 1pp.
So a central bank raising rates “by 25 basis points” has moved them a quarter of a point — from 4% to 4.25%, say. Nobody can misread that as a 25% increase, which is precisely the point of the term.
Getting it right in your own writing
Use percentage points when you subtracted one percentage from another. Use percent when you divided by the starting value.
If a figure could be read either way, give both:
Market share rose from 12% to 15% — three percentage points, or a 25% increase.
It costs a few words and removes all doubt. When the underlying number is itself a percentage, that clarity is worth having.