A grocer used to sell rice at ₹42 per kg and make a profit of 20%. After a poor harvest the rice costs him 25% more, and he raises his counter price to ₹49 per kg. His profit percent now is:

The old price gives a cost of 42/1.20 = ₹35 per kg, so the new cost is $35\times 1.25$ = ₹43.75. Selling at ₹49 leaves ₹5.25 on a cost of ₹43.75 = 12%. (His price went up by 7/42 = 16.67% while his cost went up by 25%, so the margin had to shrink; quoting the 16.67% price rise as the new profit percent confuses a change in price with a margin.)