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Hmm, the random encounter rate seem fairly high. You didn't turn on the "disable random encounters" option in the debug menu?

Is it a matter of the enemies not doing enough damage before you kill them? Or is your hp hitting 0 and you're not dying?

Enemies don't do enough damage. 
What I did was I just ran from every encounter I had and got all the way to the final boss before I had some actual difficulty