A percentage expresses a share or a relative change. A percentage point measures the difference between two figures already expressed as percentages. Confusing them changes a financial headline’s meaning.
A hypothetical interest rate rises from 5% to 6%. The difference is one percentage point. Its relative increase is (6 / 5 − 1) × 100, or 20%. Both are correct when properly labelled. Saying the rate rose by 1% does not accurately describe that move.
| Measurement | Change |
|---|---|
| Percentage points | +1 pp |
| Basis points | +100 bp |
| Relative increase | +20% |
One basis point equals 0.01 percentage points. A rate cut from 6.50% to 6.25% is therefore 0.25 percentage points, or 25 basis points. Basis points conveniently describe small changes in rates and yields. One basis point is not one percent of the original interest rate.
If the foreign-currency deposit share rises from 30% to 33%, it increases by three percentage points, or 10% relative to its old share. That does not necessarily mean foreign-currency balances rose 10%; total deposits may also have changed. Check both numerator and denominator amounts.
A price of AZN 100 becomes AZN 120 after a 20% increase. A subsequent 20% fall gives AZN 96, not 100, because the second change uses a different base. Successive price or return percentages cannot simply be added like amounts of money.
For a rate decision, show old and new levels and the change in points. Revenue and volume usually call for relative percentage growth and, where useful, the absolute amount. Ordinary percentage growth is undefined from a zero base. FinFly chart labels should preserve these distinctions even when shortened.
50 basis points.
No. The annual rate fell by one percentage point. With positive inflation, the price level is still rising.
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