As your HTML will always be category followed by item, you can find the items then use .prev() to get the previous div which contains the category:
var category = $(this).prev().text()
As the requirement is "so I could filter items out later" - you don't want to set the value= to category otherwise you get multiple options with the same value, so you don't know which one was selected
<option value="Kitchen">Spoon</option>
<option value="Kitchen">Plate</option>
instead, you can add a data- attribute to the <option>
<option data-category="Kitchen">Spoon</option>
<option data-category="Kitchen">Plate</option>
then you can use this to filter the options later, eg:
$(".item-select-field :not([data-category='Kitchen'])").hide()
Giving:
$('.actual-item').each(function() {
var val = $(this).text();
var cat = $(this).prev().text();
$('.item-select-field').append('<option value="' + val + '" data-category="' + cat + '">' + cat + ":" + val + '</option>');
})
<script src="https://cdnjs.cloudflare.com/ajax/libs/jquery/3.3.1/jquery.min.js"></script>
<div class="item-category">Kitchen</div>
<div class="actual-item">Spoon</div>
<div class="item-category">Living room</div>
<div class="actual-item">Sofa</div>
<div class="item-category">Kitchen</div>
<div class="actual-item">Plate</div>
<select class='item-select-field'>
</select>
You could equally get each category and use .next() to get the item for that category, which ever makes the most sense to you.
$('.item-category').each(function() {
var cat = $(this).text();
var val = $(this).next().text();
$('.item-select-field').append('<option value="' + val + '" data-category="' + cat + '">' + cat + ":" + val + '</option>');
})
<script src="https://cdnjs.cloudflare.com/ajax/libs/jquery/3.3.1/jquery.min.js"></script>
<div class="item-category">Kitchen</div>
<div class="actual-item">Spoon</div>
<div class="item-category">Living room</div>
<div class="actual-item">Sofa</div>
<div class="item-category">Kitchen</div>
<div class="actual-item">Plate</div>
<select class='item-select-field'>
</select>