Yellow spice is one of four spices dropped by Hell-Rats in Evil Dave's basement that is located in the Southwestern room. If yellow spice is used in a stew, it becomes a Spicy stew, which can temporarily raise the stats of Agility, Slayer, Thieving, and Hunter. The amount it can raise these stats depends on how many doses used in the stew (between one and three). Each dose of spice can cause the boost to either increase or decrease a stat by -1 to +1, up to a maximum of -5 or +5 with three doses.
Once all 4 doses are used, it becomes an empty spice shaker, which cannot be used for anything.
It is suggested that you use a Wily cat to catch the Hell-Rats because they offer a better chance to kill the rats than any other feline.