How to display product catalogue from DB with images and allow the user to select one of the product

You can create your own “Custom Action” and API as shown with the restaurant API and either return the image payload through base64 encoding within JSON to your frontend or through multipart/form-data. For the latter, you need to tweak your frontend and probably parts of the rasa_core_sdk and extend it to send data of that mimetype.
Have you checked the other threads in this forum? How Handle button and images in rasa?
Finally, your frontend controls how to display the images, so you can as well make them buttons (which is also supported by RASA).