In his monthly economic briefing on 11 June, Economy Minister Akmal Nasrullah Mohd Nasir outlined a combination of labour market, energy, and climate-related challenges that could affect households and businesses over the coming year.
More Workers Filed Retrenchment Claims In May
Workers who lost their jobs filed 7,766 Employment Insurance System (EIS) claims in May, up 8.4% from 7,162 in April, according to PERKESO data. The overall unemployment rate stood at 3.0% in April, with 511,800 people out of work nationwide, according to DOSM’s latest Labour Force Statistics[PDF]..
Even so, job placements through the MYFutureJobs portal rose 19% month-on-month to 14,366 in May, suggesting employers were still recruiting even as retrenchments climbed.
Coal Prices Are Rising
Electricity generation costs have been rising as global coal prices jumped 8.2% in early June to US$142.62 per metric tonne, roughly RM580 per tonne at current exchange rates.
Coal is one of the fuels used to generate electricity, so higher prices can push up generation costs. Some power producers have been switching between natural gas and coal depending on which is cheaper at the time, but that flexibility becomes less effective when coal prices rise.
Electricity tariffs are reviewed monthly based on fuel price trends under the Automatic Fuel Adjustment mechanism introduced in July 2025. If coal prices remain elevated, higher generation costs could eventually be reflected in household electricity bills.
El Niño Could Affect Food Production And Water Supply
The El Niño weather pattern is forecast to begin this month and continue until at least mid-2027, with rainfall in some states expected to fall by 40% to 60%.
During the 2015 to 2016 episode, temperatures above 37°C forced the temporary closure of 250 schools in northern Peninsular Malaysia, and palm oil production dropped between 16% and 18%. A similar outcome this time could reduce crop yields by 8% to 10%. Fresh produce prices are among the most likely to feel the pressure, as vegetable prices have already been under strain this year, and food supply chains remain vulnerable to global disruptions.
With three separate pressures converging at once, the second half of 2026 is shaping up to be a challenging period for household budgets. We’ll be keeping a close eye on how each of these develops.
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