Why does God, according to his own words, "create evil"?

According to the Oxford English Dictionary, evil can mean:

1. Profoundly immoral and malevolent: This usage describes the moral quality of certain actions or behaviors. For example, "He committed an evil act."

2. Causing harm or distress; harmful: This usage can apply to objects or events as well as persons. For example, "The storm caused great evil."

3. (In religious contexts) The force in nature that governs and gives rise to wickedness and sin.

4. Unpleasant; disagreeable: This is a less common usage, and typically applies to non-moral contexts. For example, "He was plagued by an evil smell."

It does not refer to (1) or (3) in this context. It refers rather to what is expressed in the Gospel:

Take therefore no thought for the morrow: for the morrow shall take thought for the things of itself. Sufficient unto the day is the evil thereof (Matthew 6:34)

John Chrysostom explains the same in his commentary on Matthew, where he quotes Isaiah:

By evil here He means not wickedness - far from it - but affliction, trouble and calamities. In the same way elsewhere He says Is there evil in a city, which the Lord hath not done? (Amos 3:6) not meaning rapines, nor injuries nor any thing like these, but the scourges which are borne from above. And again, I, He says, make peace, and create evils (Isaiah 45:7). For neither in this place does He speak of wickedness, but of famines, and pestilences, and things accounted evil by most men, who generally call these things evil. Thus, for example, the priests and prophets of those five lordships, when having yoked the kine to the ark, they let them go without their calves (1 Samuel 6:9), gave the name of evil to those heaven-sent plagues, and the dismay and anguish which thereby sprang up within them (Homily XXII).

This explanation is extracted from the New English Translation version:

God is ultimately sovereign over his creation, including mankind and nations, in accordance with his sovereign will, he can cause wars to cease and peace to predominate, or he can bring disaster and judgment on nations

Also in that version you can read this:

I am the one who forms light and creates darkness; the one who brings about peace and creates calamity

Reading the context even from the KVJ version:

I form the light, and create darkness: I make peace, and create evil: I the LORD do all these things.

Now let's see what the New International Version translates from this text:

I form the light and create darkness, I bring prosperity and create disaster; I, the LORD, do all these things.

You can see there are dualities in the text: light and darkness, and finally peace and evil, but evil doesn't sound exactly the counterpart of peace.

This text is referring about the sovereign will of God.

God is good, that's a fact, but our minds just can't understand the magnitude of the Lord, His will, and His justice... Him and only Him has the universal context of all things, we are totally limited as humans in front of God, He is over any concept we could create about what's good and what's not.

Frecuently when you find something that seems off in the bible, is because the traduction is not accurate, or the context is not fully understood, or we are just too limited to understand it completely.

At the outset, we need to grasp the significance of the sentence preceding the one you quoted:

There is none beside me. I am the Lord, and there is none else.

This is the Lord God Almighty, creator of time, space, matter and all life. He is sovereign over His creation – which means God is sovereign over humanity and has been since the beginning of human history.

We also need to put Isaiah 45:7 into context. Here God is promising to bring calamity on the pagan empire of Babylon through King Cyrus for the sake of His chosen people—to restore them to their homeland and rebuild their ruined cities. (Isaiah 41:8–10; 44:26; 45) Now let’s consider what the Hebrew word ra’ means as translated into English as “evil”.

The term can be used in the sense of moral evil, such as wickedness and sin (Matthew 12:35; Judges 3:12; Proverbs 8:13; 3 John 1:11), or it can refer to harmful natural events, calamity, misfortune, adversity, affliction, or disaster. It is in this second sense that Isaiah speaks, and his meaning is reflected in most modern Bible translations of Isaiah 45:7 (emphasis added): “I make success and create disaster” (HCSB); “I make well-being and create calamity” (ESV); “I send good times and bad times” (NLT).

Is Isaiah 45:7 speaking of moral evil? No. Moral evil is the choice that people make contrary to God’s good purposes. Moral evil does not conform to God’s will and for his plans to bless all who obey Him. Moral evil is the direct opposite of our creator’s good and perfect will for those of his creation who love and obey Him.

What some people fail to realise is that God rules sovereignly over all things, including evil. Only God can (and will) destroy evil, permanently. But God is not the creator of moral evil.

Source: https://www.gotquestions.org/Isaiah-45-7.html

Additional information on theodicy, the problem of evil, and why God allows evil to exist: https://www.gotquestions.org/theodicy.html

EDIT: As suggested by Maverick, Strong's Exhaustive Concordance lists 16 meanings of the Hebrew word ra' and I agree with his conclusion that, from a biblical perspective, it is impossible that God created moral evil. https://www.biblestudytools.com/lexicons/hebrew/kjv/ra.html

Another Bible verse which is a promise towards God's chosen people:

For I know the thoughts that I think toward you, saith the LORD, thoughts of peace, and not of evil, to give you an expected end. (Jeremiah 29:11 KJV)