A rise in the BI Rate does not automatically make consumers stop buying. However, when the cost of taking on credit increases, large-value purchase decisions may require longer consideration.
For brands, this shift matters because a drop in transactions does not always mean demand has disappeared. Consumers may still want the product but delay their commitment, reduce their purchase value, move to a more affordable option, or look for a payment scheme that feels safer.
In other words, some demand may turn into deferred demand: the desire to buy is still there, but the purchase decision shifts to a later time.
Interest Rates Rise, and the Cost of Commitment Changes
The BI Rate is the policy interest rate Bank Indonesia uses to signal the direction of monetary policy, and it is one of the references for setting interest rates in the money market and the banking sector.
The rate stood at 4.75% from September 2025 to April 2026. The Monthly Board of Governors Meeting on 19–20 May 2026 raised it by 50 basis points to 5.25%. The Weekly Board of Governors Meeting on 9 June 2026 added 25 basis points, bringing it to 5.50%. The Monthly Board of Governors Meeting on 17–18 June 2026 added another 25 basis points, taking the BI Rate to 5.75%. Bank Indonesia held the rate at that level at its meetings on 22 July 2026 and 19 August 2026 (Bank Indonesia, 2026a, 2026b, 2026c).
The total increase amounts to 100 basis points, or one full percentage point. The 5.75% level in August 2026 is equal to the level in effect from January to April 2025, so the gradual cuts made throughout 2025 have been fully reversed.
However, a BI Rate increase does not mean all lending rates immediately rise by the same amount. The policy rate is passed through to the price of credit via each bank's funding structure and policies.
For consumers, this is not simply a matter of whether the interest figure goes up or down. What changes is the cost of commitment: the cost of taking on a financial obligation over a given period. The total cost over the tenor, whether the rate is fixed or floating, the down payment, and the ability to keep up with payments all become part of the decision before a transaction takes place.
For marketers, this means affordability does not stop at the question of whether consumers can afford the product. The question also becomes whether consumers feel ready to take on that commitment now.
Young People Make Credit Decisions from a Position That Is Not Yet Fully Established
The question of readiness becomes even more relevant when consumers are at an early stage of their careers.
Statistics Indonesia (Badan Pusat Statistik, BPS) recorded a national Open Unemployment Rate (Tingkat Pengangguran Terbuka, TPT) of 4.68% in February 2026, down 0.08 percentage points from February 2025, with average worker wages of Rp3.29 million. In the 15–24 age group, the TPT was 16.16%, more than three times the national figure (Badan Pusat Statistik, 2026).
The Rp3.29 million wage figure is an average across all age groups, so it reflects national conditions and does not describe the wages of young people specifically. Even so, the two figures together suggest that consumers in the early stages of their careers face a different labor market, particularly in terms of the risk of being unemployed.
This is relevant to credit decisions because installments are obligations that fall due every month, while income can change. When the risk of job loss is higher, taking on a long-term commitment may require a greater degree of financial certainty.
For consumers, these conditions can mean that a credit decision requires a greater degree of financial certainty. For brands, this matters because a consumer who has not yet decided has not necessarily lost interest in the product. The barrier may lie in the ability to pay or in readiness to take on a commitment at that moment.
For this reason, a decline in transactions needs to be read more carefully. Brands need to distinguish whether desire for the product has genuinely declined, or whether consumers still want it but are not yet ready to take on a financial commitment now.
Deferred Demand: When Desire Remains but Commitment Is Postponed
Under tighter affordability conditions, a decline in transactions can stem from two situations that look similar in a sales report.
Lost demand:
"I don't want this product."
Deferred demand:
"I want this product, but I'm not yet ready to take on the financial obligation right now."
Both can lead to lower conversion, but they require different responses. If the problem is lost demand, the brand needs to evaluate product relevance, positioning, price, or value proposition. If the problem is deferred demand, the issue may lie in the consumer's ability or readiness to take on a commitment at that moment.
For this reason, a decline in conversion does not automatically mean demand has been lost. Consumers may continue to search for and consider the product, but lengthen their consideration period, reduce their purchase value, move to a more affordable option, or look for a payment scheme that feels safer.
Deferred demand does not mean every decline in conversion is caused by affordability. The concept is better used as a way of reading a possibility that needs to be tested through patterns of consumer behavior.
Three Signals Brands Need to Distinguish
To understand whether demand has truly disappeared or has merely been postponed, brands need to distinguish at least three conditions.
1. Desire Declines
Consumers increasingly do not want the product or category. In this condition, the main problem is closer to product relevance, positioning, or value proposition.
Brand response: re-evaluate the reasons consumers choose the product and strengthen its relevance.
2. Desire Holds, Affordability Declines
Consumers still want the product, but the price or the size of the expense makes the purchase feel not yet possible right now. Desire for the product can remain even when the ability to allocate funds is more limited.
Brand response: sustain consideration and find ways to keep the product relevant until consumers are in a position to buy.
3. Desire Holds, Commitment Readiness Is Low
Consumers still want the product and may still see the purchase as desirable, but are not yet comfortable taking on the financial obligation now. In this condition, the barrier is not simply whether the product is affordable, but whether the consumer is ready to take on that commitment.
Brand response: revisit the value proposition and the way the product is financed, so that consumers have options that better match the level of commitment they are ready to take on.
All three conditions can produce the same symptom on the surface: slowing transactions. The diagnoses, however, differ. A decline in desire calls for efforts to win back relevance. Weakening affordability calls for a strategy to sustain consideration. Low commitment readiness, meanwhile, makes how to buy, how to pay, and the level of commitment important parts of the decision.
For marketers, the difference matters because consumers who have not yet bought are not necessarily outside the funnel. Some may still be in consideration but need more suitable timing, pricing, products, or financing schemes before making a decision.
For this reason, marketers' questions should not stop at "how many people bought?" The next question is "what happened to the consumers who haven't bought?"
This is where the concept of deferred demand becomes relevant. If desire remains but the purchase decision shifts to a later time, brands need to manage that demand so it does not drop out of the consideration set before consumers are ready to buy.
The New Consumer Decision Architecture: How a Purchase Is Financed Is Now Part of the Decision
The credit environment is also changing as consumers have more financing options.
Access to digital financing has already reached a large scale. The Financial Services Authority (Otoritas Jasa Keuangan, OJK) recorded outstanding online loans of Rp101.03 trillion in March 2026, up 26.25% year on year, with a 90-day default rate (TWP90) of 4.52%. In the same period, the 19–34 age group accounted for 48.65% of outstanding non-performing loans by age group (Otoritas Jasa Keuangan, 2026b).
The 48.65% figure describes the age composition of non-performing loans. The data does not include the age composition of all borrowers, so this share indicates the extent of young people's exposure to non-performing loans and cannot be used to assess that group's default rate.
For paylater products, the banking industry's outstanding balance in July 2026 stood at Rp31.56 trillion, up 31.22% year on year, spread across 33.50 million accounts. As of the previous month, OJK recorded an average outstanding balance of Rp940 thousand per account and a non-performing loan ratio of 2.36%. Usage is largely tied to everyday needs and lifestyle, with fashion at 66.4%, household appliances at 52.2%, and electronics at 41% (Otoritas Jasa Keuangan, 2026a, 2026b).
These figures do not mean that all young consumers use online loans or paylater. Nevertheless, their scale shows that consumers now operate in an environment with a wider range of financing options.
This means the consumer journey can be read with a slightly different architecture:
Need → Consideration → Affordability Check → Financing Choice → Purchase
Financing is no longer just a detail that comes after consumers decide to buy. For some categories, how consumers pay can be part of the decision about whether to make the purchase now or postpone it.
For marketers, the question then becomes not only: "How do we make consumers want to buy?"
But also: "How do consumers want to buy?"
Four Strategic Shifts for Marketers
If changes in the cost of commitment can shift the timing and form of purchases, there are four changes in thinking that brands need to consider.
1. From Conversion to Readiness to Commit
Conversion shows whether a transaction takes place. However, a decline in conversion does not explain whether consumers have lost the desire to buy or are simply not yet ready to take on a financial commitment.
For this reason, purchase intent and readiness to commit need to be read as two different things. A consumer can have high purchase intent and low readiness to commit at the same time.
For brands, this means consumers who have not yet bought are not necessarily outside the funnel. Some may still be within it but need a longer time before making a decision.
2. From Price Communication to Total Cost Communication
In credit-based purchases, price is not the only figure consumers need to understand.
Tenor, down payment, interest rate, additional fees, and total payment make up the overall cost of commitment. Extending the tenor can lower the monthly installment while increasing the total interest paid.
For this reason, messaging such as "installments starting from" needs to be placed alongside information that helps consumers understand the financial consequences in full.
Transparency becomes even more important when consumers are trying to reduce the risk of making the wrong decision.
3. From Giving Discounts to Designing Affordability
When consumers become more sensitive to affordability, a brand's response does not always have to be a product price discount.
Brands can look at how the purchase structure makes a commitment feel more or less feasible. Tenor options, down payments, financing schemes, payment flexibility, and the availability of products at several price points can all influence the consumer's path to a transaction.
The question shifts from: "How big a discount should we give?"
To: "How do we design the purchase so that consumers who still want the product can make a decision at a level of commitment that suits them?"
4. From Lost Demand to Managing Deferred Demand
Consumers who have not yet bought need to be read differently from consumers who are no longer interested.
If signals indicate that desire remains but transactions are slowing, brands can maintain the relationship with those consumers until they are more ready to make a decision. This means strategy focuses not only on driving conversion now, but also on managing postponed demand.
At this point, remarketing, product communication, financing information, or more affordable product alternatives can serve not merely to chase new transactions, but to keep consumers in the consideration set.
What Should Marketers Monitor?
Deferred demand cannot be concluded from a single indicator. Brands need to look at several signals together to know whether consumers have truly left a category or are only postponing their purchase.
1. Conversion vs. Traffic
If traffic holds but conversion weakens, affordability may be one possible barrier. Consumers are still coming and showing interest, but fewer follow through to a transaction.
2. Transaction Value
A decline in average transaction value can indicate down-trading, and does not always mean consumers are leaving the category. If consumers move from premium products to lower-priced ones, their desire for the category may still be there while their ability to pay has changed.
3. Financing Behavior
Changes in tenor choices, installments, down payments, or payment methods can indicate a change in consumers' commitment threshold. An increase in how often consumers ask about financing options during the inquiry process can also be a signal that how to pay is becoming part of the purchase consideration.
4. Search and Consideration Period
If search interest holds but transactions slow, demand has not necessarily disappeared. Consumers may need more time to compare options before making a purchase decision.
5. Variant Shifts
A shift from premium SKUs to mid-range or entry-level ones can indicate that consumers remain in the same category but are adjusting their purchases to their financial capacity.
6. Response to Financing vs. Product Discounts
If consumers respond more to financing promotions than to product discounts, the barrier to purchase may relate more to affordability and the size of the commitment required than to the perceived value of the product itself.
None of these signals can prove deferred demand on its own. However, if several patterns appear at the same time, brands have stronger grounds to test whether the problem is truly lost demand or a change in consumers' readiness to commit.
Not Merely Protecting Purchasing Power, but Reading When Consumers Are Ready to Buy
The BI Rate increase changes the credit cost environment, but its impact on consumers does not stop at the interest figure. As the cost of commitment rises, purchase decisions can shift in ways that are harder to see from conversion alone.
Consumers may continue to search for, compare, consider, and want the same product, yet delay the decision until the commitment feels safer.
For brands, this distinction matters. Lost demand requires a strategy to win consumers back. Deferred demand requires a strategy to keep consumers engaged until they are ready to buy.
In a higher credit cost environment, the ability to tell the two apart becomes increasingly important. The brand's challenge is not only to make the product feel affordable, but to understand whether consumers no longer want to buy, or still want to buy but are not yet ready to commit now.
References
Badan Pusat Statistik. (2026, May 5). Tingkat Pengangguran Terbuka (TPT) sebesar 4,68 persen, rata-rata upah buruh sebesar 3,29 juta rupiah [Open Unemployment Rate (TPT) at 4.68 percent, average worker wage at 3.29 million rupiah] [Press release]. https://www.bps.go.id/id/pressrelease/2026/05/05/2574/tingkat-pengangguran-terbuka--tpt--sebesar-4-68-persen--rata-rata-upah-buruh-sebesar-3-29-juta-rupiah
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