Literally every item in my inventory disappeared. it was right next to my house, so I know they didn't drop on the ground and then time out, I was able to get to the spot within seconds. I also have ItemPhysic installed, so it might be an interaction between those two mods?

It was more likely the fireball explosions, or the fires they spawn, there was another "bug" report where the Sticky mod would yank your items into the world, and the Ghastly fireball would destroy them.

Disable Ghastly in the configuration if this bothers you too much.