Imagine there are two schools: A typical small private school, which normally achieves high grades, and a larger state school which normally achieves a broader spread. Normally the highest individual grade is achieved at the private school.
The historic average of the private school might be A-star, A, B, but predictions were A-star, A, A. Rankings are correct to the individuals' abilities. "Actual" or "deserved" standard could be A, A, A or A, A, B.
The state school's top 3 grades are normally A, A, B. This year you have a student who's capable (and likely) to achieve an A*. Teacher predictions for the top three grades are therefore A-star, A, A. Rankings are still correct according to ability.
Across the country the top 6 grades are normally A-star, A, A, A, B, B.
The private school uses the teacher predictions, because it has a small class: A-star, A, A.
We're now left with only A, B, B available to give to the top students at the state school, so the A-star, A, A assessed students are awarded A, B, B. Every one is a downgrade.
But it's OK, because across the country there's no grade inflation.
Ranking students might be roughly correct, but many of the rankings in the middle where students are very similar are basically random.