Use percentage points to describe the difference between two rates. If inflation falls from 6% to 4%, it falls by 2 percentage points. If the question asks for the percentage fall in the inflation rate, divide the difference by the starting rate. In this example the relative fall is about 33.3%.
Check what the figures measure before interpreting the change. A lower positive inflation rate means the overall price level is still rising, but at a slower rate. In H2 Economics Paper 1, which assesses case studies, a clear sentence naming the variable and the period can prevent an otherwise correct calculation from being misread.
- Copy the variable, units and period from the extract.
- Subtract the rates for a percentage-point difference.
- Divide the change by the initial figure for a relative percentage change when requested.
- Explain what changed in the underlying economic situation.
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Decide what the question is asking for
“By how many percentage points did unemployment fall?” asks for the difference between two rates. “Calculate the percentage fall in the unemployment rate” asks how large the difference is relative to the original rate. Write the requested unit beside your answer.
When a question asks you to describe a change, identify the direction and use relevant data. When it asks you to explain, use the evidence to support the mechanism or reasoning you set out. The same number can help with both tasks, but a calculation alone does not explain a cause.
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Worked example | Inflation slows while prices rise
Suppose the price index starts at 100. After a year with 6% inflation it is 106. If inflation is 4% the next year, the index rises to 110.24, because 106 × 1.04 = 110.24. Inflation slowed by 2 percentage points between those years, while the price index increased in both.
A precise case-study sentence would be “The inflation rate fell from 6% to 4%, a decline of 2 percentage points. As the rate remained positive, the price level continued to rise.” Use this distinction before drawing conclusions about purchasing power or discussing possible causes.
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Check one more example independently
An unemployment rate moves from 5% to 4%. The fall is 1 percentage point, or 20% relative to the initial rate of 5%. If you need to infer what happened to the number of unemployed people, you also need information about the size of the labour force. The rate alone describes the share.
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Frequently asked questions
What if the first rate is zero?
A relative percentage change from zero is undefined under the usual calculation. You can still report the difference in percentage points and state the starting and ending rates.
Where can I verify the assessment?
See the scheme of assessment in the 2027 H2 Economics 9570 syllabus.