We can never know if grade inflation is happening without appropriate comparisons. One comparison would be from one year to the next, but that wouldn’t be nearly as good as five or ten years of experience.
Even if grades are getting higher, grade inflation is not the only explanation. Students could be getting better. Don’t scoff at that. The SAT has to be recalibrated every couple of decades or so because the population as a whole is scoring higher (making the test less useful).
Your professor may just have raised the grade because it was borderline and the student asked. In fact, I once read that if you ask, you often get half a grade better just for asking. Lots of students do that. It’s like a little negotiation.
It occurs to me that what might be bothering you is the professor overruling your judgment. As if he didn’t trust you or something like that. That could be lurking underneath this even if you don’t think it is true on the surface. I really don’t think it means much, and I don’t think the grades of your class as a whole mean much in terms of either pride or grade inflation. You’d need a lot more data to show grade inflation, and I doubt very much it could be proved.
I know we hear this every once in a while. Maybe there always someone complaining about it. I suspect is as much perception and the special group you are looking at, and the special group you share information with as it is something significant. Professors are under all kinds of pressures. Time. Dealing with students. Dealing with the administration. Getting grades in. Getting papers graded. You know. A few here and there are always going to be giving in just because the pressure is too much. I don’t think it means much.