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The decision comes weeks after it was hit by a cooking oil shortage and ahead of a general election where soaring prices of goods will be a key issue.
On Wednesday, Deputy Prime Minister Najib Razak announced that a national system for keeping and distributing the items will be created, the New Straits Times daily reported.
'The main focus is to ensure that the supply and prices of essential items are stable. We cannot reduce prices, but what is important is to keep them stable,' he was reported as saying.
The stockpile will be used during emergencies such as natural disasters or energy shortages.
Inflation in Malaysia is not at an all-time high. The price hikes are due to global shortages of daily essentials such as cooking oil, wheat and soya beans; the festive season; and hoarding by local suppliers hoping to make a quick profit.
Datuk Seri Najib also announced the formation of a high-powered National Price Council to help ease the burden of people hit by surging prices. It will be chaired by the Prime Minister.
Its chief adviser, Dr Kamal Salih, said petroleum could be an item for stockpiling although Malaysia is a net exporter of the fuel.
The council will come up with a complete list of items when it meets next week.
It will also set up a 24-hour call centre for consumers to report excessive profiteering or unscrupulous business practices.
'The council will monitor, advise on and oversee the government's price policy, competitive market structure and the efficiency of subsidy schemes.
'It will also be tasked to prevent unfair and collusive trade practices affecting supply and prices of essential goods and services,' said Datuk Seri Najib.
He added that the government would step up efforts to curb the smuggling of essential items which often lead to mounting prices.
Amid the surging global oil prices, inflation is a major concern for Malaysians.
Tomorrow, opposition parties and civil groups plan to hold a rally in Kuala Lumpur to protest against the rising cost of living.
In an independent survey last November, inflation topped the list of respondents' concerns (20 per cent), followed by rising crime (14 per cent).
The study by the Merdeka Centre, which tracks voter sentiments, involved about 1,000 respondents.
The cooking oil shortage, which hit the country early this month, triggered panic buying. That eased only after the government flooded the market with 70,000 tonnes of cooking oil.
'The government's decision to set up a national stockpile will go some way in ensuring price stability. It is something the consumers can look forward to,' consumer activist N. Marimuthu told The Straits Times. He is the head of the Federation of Malaysian Consumers Association.
Domestic Trade and Consumers Affairs Deputy Minister S. Veerasingam denied that the decision to set up a national stockpile was linked to the general election.
'The government just wants to ease the burden of the people hit by rising prices of goods. It's not because of the election,' he told The Straits Times.
It is still uncertain to what extent Singapore will be affected by Malaysia's plan to stockpile essential goods.
Figures show that Singapore relies heavily on Malaysia for certain goods such as palm oil and eggs.
About 99 per cent of the Republic's palm oil comes from Malaysia, as do 70 per cent of imported eggs.
About half of Singapore's imported vegetables and about 40 per cent of its imported chicken and fish also come from Malaysia.
ADDITIONAL REPORTING BY TARA TAN
ADDITIONAL INFORMATION FROM THE STAR/ASIA NEWS NETWORK
