People often use percentage change and percentage increase as if they mean the same thing. They do not.
Percentage change is the broad term. It tells you how much something moved up or down. Percentage increase is only used when the value goes up. If the value goes down, you have a percentage decrease.
Quick Answer
Use percentage increase when the new number is larger than the original number. Use percentage decrease when it is smaller. Use percentage change when you want one formula that covers both cases.
Formula
The general percent change formula is ((New - Original) / Original) x 100.
If the result is positive, it is an increase. If the result is negative, it is a decrease.
Example: Increase
If a value goes from 40 to 50:
- Change = 50 - 40 = 10
- 10 / 40 = 0.25
- 0.25 x 100 = 25%
This is a 25% increase.
Example: Decrease
If a value goes from 40 to 30:
- Change = 30 - 40 = -10
- -10 / 40 = -0.25
- -0.25 x 100 = -25%
This is a 25% decrease, or a -25% change.
Common Mistakes
- Using percentage increase for a negative result.
- Dividing by the new value instead of the original value.
- Confusing percentage change with percentage point change.
Percentage Change vs Percentage Points
If an interest rate moves from 5% to 7%, that is a 2 percentage point increase. In relative terms, it is a 40% increase.
Best Tool for Both
If you do not want to work it out by hand, use the Percentage Calculator. It handles percentage increase, percentage decrease, and other common percent calculations.
Final Takeaway
Percentage change is the umbrella term. Percentage increase is one type of percentage change. If the value goes down, the correct term is percentage decrease.