Key takeaway
A percentage is a relative ratio (part of a whole); a percentage point (pp) is an absolute unit equal to 1/100. The gap between 5% and 6% is 1 percentage point, but that is a 20% relative rise. Confusing the two — saying 'rates rose 20%' when they rose 1 pp — is the classic error in news and finance.
Scope and assumptions
General convention. 'Percent' describes a ratio; 'percentage point' describes a difference of rates. This site is informational and not official.
Short answer: A percentage is a relative ratio (part of a whole); a percentage point (pp) is an absolute unit equal to 1/100. The gap between 5% and 6% is 1 percentage point, but that is a 20% relative rise. Confusing the two — saying "rates rose 20%" when they rose 1 pp — is the classic error in news and finance. This page contrasts the ratio "percent" with the unit "pp"; for the related choice between percent change and pp, see Percent Change vs Percentage Points, and for the unit's definition start at What Is a Percentage Point.
Quick navigation
- What a pp is → what-is-a-percentage-point
- Change vs points → percent-change-vs-percentage-points
- Basis points → basis-points-vs-percentage
- The calculator → Percentage Calculator
1. Two different things
- Percent (%) — a ratio out of 100. "20%" compares a part to a whole.
- Percentage point (pp) — a unit of difference between two rates. 1 pp = 1% of the scale, flat.
2. The 5% → 6% trap
A rate moves 5% → 6%.
- Absolute gap: 6 − 5 = 1 percentage point
- Relative change: (6 − 5) / 5 × 100 = +20%
Same move, two true statements. Saying "up 20%" without context implies the underlying value rose 20%; saying "up 1 point" describes the rate itself.
3. Worked table
| Move | pp change | % relative change |
|---|---|---|
| 5% → 6% | +1 pp | +20% |
| 10% → 12% | +2 pp | +20% |
| 50% → 55% | +5 pp | +10% |
| 2% → 1% | −1 pp | −50% |
4. Why it misleads
"Interest rates rose 1%" sounds tiny if read as a rate move — but if the rate went 5% → 6%, that is +1 pp, a 20% relative jump in borrowing cost. The missing unit changes the story.
5. Correct wording
- ✅ "The rate rose 1 percentage point."
- ✅ "The rate rose 20% (from 5% to 6%)."
- ❌ "The rate rose 1%" (ambiguous/wrong for a 5→6 move).
6. Common mistakes
- Calling a pp move a 'percent' move — 5→6 is +1 pp, not +1%.
- Inverting which is relative — the % change is relative to the starting rate.
- Adding pp and % together — they are different units; never sum them.
- Dropping the unit in a sentence — always write pp or %.
- Assuming small pp = small impact — depends on the base rate.
7. One-line rule to never slip
If the sentence compares two rates, the unit is pp; if it describes a move relative to a starting rate, the unit is %. Write both when it matters: "up 1 pp (a 20% rise)". That single habit ends the confusion, because the reader sees the flat gap and the relative jump side by side and can use whichever they need.
FAQ
Q: What is the difference between percent and percentage point? Percent is a relative ratio; a percentage point (pp) is an absolute 1/100 step. 5%→6% is +1 pp but +20% relative.
Q: If rates go from 5% to 6%, what changed? +1 percentage point (absolute), which is also a +20% relative rise from 5%.
Q: Why do headlines get this wrong? They often say 'rose 20%' meaning the rate went 5→6, when they mean +1 pp; the two numbers describe the same move differently.
Q: Can a percentage point be negative? Yes — a fall from 6% to 5% is −1 pp.
Q: Is 'percent' the same as 'point'? No. Never say 'rates rose 1 percent' for a 5→6 move; say '1 percentage point' (or '20 percent' if you mean relative).
Q: How do I convert between them? pp = absolute subtraction of rates; percent change = (new−old)/old × 100. Different operations.
Q: Which should I report? State both when clarity matters: 'up 1 pp (a 20% rise)'.
Q: Do basis points relate to this? Yes — 1 pp = 100 basis points. See basis-points-vs-percentage.
Sources: Investopedia — Percentage Point; Khan Academy percentages.
Disclaimer: General convention. 'Percent' describes a ratio; 'percentage point' describes a difference of rates. This site is informational and not official.
Sources and references
- Investopedia — Percentage Pointhttps://www.investopedia.com/terms/p/percentage-point.asp
- Khan Academy percentageshttps://www.khanacademy.org/math/pre-algebra/x31947de81e3f6453:percentages