1. What is a Percentage Point?

A percentage point (pp) is the unit for the arithmetic difference of two percentages. It represents an absolute difference, not a relative change.

2. How to Calculate Percentage Points

The calculation is straightforward:

Where:

• \( \text{percent1} \) — First percentage value
• \( \text{percent2} \) — Second percentage value

Example: If an interest rate increases from 5% to 7%, the change is 2 percentage points (7% - 5% = 2pp).

3. Difference Between Percentage and Percentage Point

Key Difference: A percentage point is an absolute difference, while a percentage change is relative to the original value. For example, a change from 10% to 12% is:

• 2 percentage points (absolute change)
• 20% increase (relative change: (12-10)/10 × 100)

4. Using the Calculator

Instructions: Enter two percentage values (percent1 and percent2) to calculate their difference in percentage points. The calculator handles both positive and negative differences.

5. Frequently Asked Questions (FAQ)

Q1: When should I use percentage points vs. percentage change?
A: Use percentage points when discussing absolute differences (e.g., interest rate changes). Use percentage change when discussing relative differences (e.g., growth rates).

Q2: Can percentage points be negative?
A: Yes, if percent2 is less than percent1, the result will be negative, indicating a decrease.

Q3: How do percentage points relate to basis points?
A: 1 percentage point = 100 basis points. Basis points are used for smaller changes (e.g., 0.25% = 25 basis points).

Q4: Is there a difference between "percent" and "percentage point"?
A: Yes! This is a common confusion. "Percent" is a relative term, while "percentage point" is absolute.

Q5: Why is this distinction important?
A: Misunderstanding can lead to significant errors in financial, statistical, and scientific reporting.