If something like the Flynn Effect[0] is real and persistent, it could make sense that grade inflation is natural, and that fewer truly qualified students would be able to get university placements, scholarships, and so on, just because there are far greater numbers of deserving, materially higher-achieving students now, but the number of available “prestigious” outcomes has not grown as fast.
I read about some years ago, that due to grade inflation, kids in high school are pressured to distinguish themselves further through more extracurriculars, volunteer work, even internships.
And you are right, the population is growing, but the number of prestigious universities has not, furthering the competitiveness. There aren't opening new Harvards.
[0]: < https://en.m.wikipedia.org/wiki/Flynn_effect >