Every +1 sword you hand out devalues the next one. You end up in an arms race where you throw bigger threats at overpowered players, which makes the world feel video-gamey and absurd.
Level one, you give the fighter a +1 longsword because it feels cool. Level three, the paladin needs something equivalent. Level five, the original sword feels weak, so you upgrade it. Soon, everyone expects magical everything. Your goblins now need to hit harder to threaten them, so you're throwing hobgoblin champions at a party that should be fighting regular hobgoblins. The power curve spirals out of control.
How to Fix Magic Inflation
Treat magic items like they're actually magical. Rare, named, and storied. When the party finds Whisperwind, the ancestral blade of the Thornheart family, that's an event. It has history. Maybe even personality. The fighter who wields it carries a legacy, and maybe someday the Thornhearts will come looking for their stolen heirloom. That's a weapon that matters.
Consider consumables over permanent buffs. A ring of Fireball is exciting and useful, but it's gone after three uses. Players love finding these because they feel powerful without permanently inflating the power curve.
Let players quest for specific items. If the wizard wants a staff that enhances ice magic, let them hear rumors of the Frost Sages in the northern peaks. Now you've got a side quest, some lore, a dungeon to explore, and at the end, a meaningful reward the player specifically wanted. That staff means something because they worked for it.