That depends on your definition of grade inflation. I think most of my undergrad classes at MIT had a median grade somewhere in the B range, maybe B-. Edit: I know some people consider a non-inflated grade curve to be C-centered.
I came to MIT with more than a year's worth of credits from the U of MN, including 6 trimesters of honors level math[0] (multivariable calc, linear algebra, diff. eq.). I had all As, except a B in my Intro to World Politics class. My senior year of HS, I was actually taking a bit over a "full course load" at the U of MN, plus 1/4 time at my HS.
I could sleepwalk through nearly straight A's at a pretty well regarded school's honors program. I was a B/C student at MIT. I like to think that a lot of it was that some "wise" uperclassmen had sat me down my freshman year and explained that once you had a degree from MIT, nobody would ask for your GPA. (The were wrong, BTW. Work for those grades.) I taught myself most of a CS degree while earning a degree in Mechanical Engineering. However, I was also too slow to put my ego in check and admit to myself that I really needed to work hard.
Note that Harvard undergrad has something like an A- average. That’s grade inflation.
That's not incompatible with weaker students being able to pass by with lower grades. Getting bare minimum grades just isn't that difficult.
edit: teammwork also seemed to be strongly encouraged. It wasn't a place that wanted you to fail. It wanted to help you succeed, which is by all means a good thing.
I think there probably aren't too many failing out of undergrad simply because they do a great job of filtering in the first place. But I know people who attended that certainly struggled... one who came a C student and still want on to a great medical school and a successful career. There isn't grade inflation.