I checked the feed, I checked Google Merchant Center final attributes and all values for in stock or out of stock are correct, why am I getting this issue in the diagnostics tab?
Great question, something I had to dig deep in for a while. And found the exact issue and solution.
The cause of your problems is structured data. The SKU you use in your schema must match the product id in your data feed. Something that never used to be a requirement. Since beginning 2020 Google Merchant Center has started to have this as a requirement. While their documentation currently does not state this requirement.
Most of the times the SKU is either not added, or you added a random MPN, post id, etc.. But that is no longer valid.
Update your structured data to have your SKU match the product id. And make sure if you are listing variants, that the first offerItem is the product listed in the data feed. Example in the screenshot below.