Lost Loot on Death - Stacked Items Issue

Upon losing looted items on death, if you loot something that is added to an existing stack you came into an area with (like potions and ammo), death causes the entire stack to be lost, not just the 1-2 picked up in the dungeon. I lost all of my ammo and potions this way.

I'm not sure if this is a bug or is working as intended.... but if it is working as intended, it's a really awful mechanic.