Percentage points describe the absolute difference between two percentages. Percentage change describes the relative ratio between them. They're different numbers. One article a day gets this wrong.
The textbook example
Approval rating goes from 40% to 45%. Two honest ways to describe it:
- 5 percentage points higher (45 − 40 = 5).
- 12.5% higher (5 / 40 = 0.125).
Both are true. Reporting one as "approval rose 5%" is technically wrong — 5% of 40 is 2, not 5. The correct phrase is "rose by 5 percentage points".
Why the media gets it wrong
Percentage points sounds clunky; "up 5%" is punchier. So writers often shortcut. The result is confusion — readers don't know whether "mortgage rates rose 5%" means 4% → 4.2% (5% relative) or 4% → 9% (5 pp). In financial contexts the error is expensive.
When each is right
- Comparing two percentages directly — percentage points. "Unemployment is 2 points lower than last year."
- Describing growth in a single metric — percentage change. "Revenue grew 15%."
- Rate changes (interest, tax, etc.) — percentage points almost always. "Rate cut by 0.25 pp."
Basis points
In finance you'll also see basis points (bps) — 1/100 of a percentage point. A 0.25 pp rate cut = 25 bps. Used because rate changes are often small and integer basis points are clearer than decimal percentage points.
Three modes. Use % change mode for the relative view; do subtraction for the absolute point view.