Gear inflation has actually been a concern of mine since about halfway through Wrath of the Lich King's expansion cycle. Back then, it was armor penetration that really set off my gear inflation warning bells, a stat that's since gone the way of the dodo. If you remember ArP, you remember that it start acting extremely weird at higher gear levels and often had to be adjusted and capped to keep it from doing things like reducing target armor into the negative.
In essence, for a brief period after Ulduar dropped, ArP could actually cause your target to have negative armor values so that their damage taken was increased by a percentage instead of just reduced by a percentage. This was very wonky. It was quickly capped and the stat adjusted. But by ICC levels of gear, it was possible again to reach 100% ArP, and doing so was absolutely your best bet as a melee DPS.
Now, let's be honest: Gear inflation is the inevitable by-product of a game where one increases in power via leveling and gaining new gear. It must happen. If you simply look at gear from original World of Warcraft's 1 to 60 game, you'll see that gear steadily increases in power and that raid gear from MC to BWL/AQ and to the now-vanished Naxxramas-40 steadily increases in power. Indeed, Naxx-40 gear was such an upgrade in power that it was roughly as strong as blue drops from level 70 instances. You could raid Karazhan in Naxx-40 gear. The Burning Crusade dealt with gear inflation differently than its successors did because it could.