What do you mean by grade deflation? I've heard of grade inflation (mostly in the context of college admissions), but not deflation.
Professors usually draw something similar to a bell curve along the grade distribution and set the average to be a particular grade. Grade inflation would be setting the average to something high (as practiced at Harvard this is usually an A-).
Grade deflation which both U Chicago and my alma mater Johns Hopkins are notorious for has professors set the average grade to a B-/C+. In classrooms full of students who have excelled their entire life, where the average represents a pretty high standard of work and achievement, setting the average to a B- is grade deflation.