Percentage point
Also called: percentage points, pp
The unit for the difference between two percentages. A rate rising from 6% to 7% has gone up one percentage point, which is a 16.7% increase.
When the thing that changes is itself a percentage, such as an interest rate, a margin or an inflation rate, its change can be described in two ways: the difference in percentage points, or the percentage change in the rate.
A basis point is a hundredth of a percentage point, so 25 basis points is 0.25 percentage points.
Example
A profit margin falling from 20% to 15% is a fall of 5 percentage points, or a 25% fall in the margin.
Learn more in these lessons
- Percentages, percentage change and percentage pointsHow do you calculate a percentage change?
- Reading market and economic news criticallyHow do you read financial news without being misled by it?
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