Percentage Increase and Decrease Explained Simply

Introduction

Have you ever wanted to buy something but found it too expensive, only to see it go on sale later? For example, imagine you had your eye on a Rs.100 chocolate bar, but it felt overpriced. Later, it goes on sale for Rs.60. How much did the price decrease in percentage terms?

Understanding percentage increase and decrease is essential for everyday shopping, financial planning, and solving quantitative aptitude questions in exams. In this article, we will break down the concept in a simple way and provide easy-to-follow examples.

What is Percentage Change?

Percentage change helps us measure how much a value increases or decreases compared to its original value.

Percentage increase: When a value grows compared to the original.
Percentage decrease: When a value reduces compared to the original.

Formula for Percentage Change

The general formula for calculating percentage increase or decrease is: Percentage Change=(Percentage Change = (Change / Original Value) * 100

Where:

Change = New Value – Original Value
Original Value = The starting number

Example 1: Calculating Percentage Decrease

Let’s go back to our chocolate bar example:

Original price = Rs.100
Sale price = Rs.60
Price drop = 100 – 60 = 40

Percentage Decrease = (40 / 100) * 100 = 40%

Key Tip:

When calculating percentage decrease, always use the original (higher) value in the denominator.

Example 2: Calculating Percentage Increase

Kelvin earns Rs.60 per week. He gets a raise and now earns Rs.70 per week. What is the percentage increase?

Original salary = Rs.60
New salary = Rs.70
Increase = 70 – 60 = 10

Percentage Increase = (10 / 60) * 100 = 16.66%

Common Mistakes to Avoid

Using the wrong denominator: Always use the original value as the denominator.
Confusing increase with decrease: If the value is reducing, it’s a decrease; if it’s rising, it’s an increase.
Forgetting to multiply by 100: The final step converts the decimal into a percentage.

Where is Percentage Change Used?

Understanding percentage change is valuable for:

Data Interpretation (graphs, tables, statistics)
Profit and Loss calculations
Interest calculations (Simple and Compound Interest)
Stock market and investments

Conclusion

Mastering percentage increase and decrease can help in making smarter financial decisions and performing well in aptitude exams. Remember to always use the correct formula, pick the right denominator, and double-check your calculations.