Where goes the Delta? To the sea, of course.
Your question is very valid and for once, I think most of the answers are too involved into mechanical details and are badly missing the big picture.
At the risk of over simplifying things, let me try to describe the situation in broad strokes:
Inflation: the volume of money grows faster than production (including services).
Deflation: production increase faster than the volume of money.
Imagine an economy with 10 products and $10. 1 product = $1.
In an inflationary scenario, money available increase: $20 for 10 products. 1 product = $2.
In a deflationary scenario, money available decrease: $5 for 10 products. 1 product = $0.5.
So far, it's pretty textbook. Now onto the stuff that you don't usually read in textbooks:
Say 10 people are attending an auction, each with $10 bucks. 10 items are for sale. $100 and 10 items. Item price is $10. Now, if just before opening the bidding, you go around and give each person $40, every one has $50. Each product sells for $50. That's the picture people have of inflation. Prices have increased, but everybody has more money, so it comes down to the same thing.
Now, let's bring this example closer to reality: You have to distribute $400, so the total amount of money is $500, which means that the normal price of each item should be $50. Now, imagine that instead of giving money to everyone at the same time, you started by giving $40 to 1 guy who was hanging out in front. The auction starts. While you go around distributing the money, the first guy manages to buy 2 items at $10 each. Now, there is $480 in the market, and only 8 items, making each item $60 on average. The next guy to get money manages to snap 2 items at $15. 6 items left and $450 in play. Each item now costs $75....and keep increasing in price as things move along.
People who get the money early buy items under their real value, and people who get paid at the end pick up the tab, because by then, there are only a few items left.
Back to reality, while inflation means that wages eventually increase (and they do), actual purchasing decrease for most people due to this simple trick. Employees are pretty much at the end of the chain.
Another major source of "signal loss" is income tax. It works by brackets, as you certainly know. Simplifying again because I am lazy:
$0-$100 = 0%;
$100-$500 = 10%;
$500-$1000 = 20%;
$1000-$5000 = 30%;
$5000-$10000 = 50%;
Take a guy who earns $100. Pays no taxes. Can buy 100 products at $1 each. Now, put in some inflation... He earns $500. He pays $50 in taxes and can buy 90 products at $5 each. By the time he earns $10,000, he can only buy 50 products on account of income tax.
So this is another area where you are bleeding purchasing power, and why income tax, which was originally presented as a tax for the ultra-rich is now a fact of life for most people (except the ultra-rich, of course).
Money as debt
Next stop: Money itself. Money is created as debt in our society. At the risk of over-simplifying things again, let's say Bank A has $1000 in assets. In the fractional reserve system (our current system), Bank A can lend out many times over that amount. Let's say $9,000, for a total of $10,000 (much more in reality). And of course, it lends that money at interest. When bank A has made $10,000 available through 10% interest loans, the total amount of money has increased by $10,000, but when the loans are paid back, $11,000 must be paid to the bank, so the net result of the operation is that $1,000 get taken out of the market.
This system explains why almost all companies and governments have huge debts, and why most of the world's large companies belong to financial institutions of some kind, and why most of the world's wealth rest in very very few hands.
To fully answer your question and provide details and references and names, one would have to write a book or 5. There is a lot more than can be said on the subject, and of course, all the examples given here are extremely simplified, but I think they illustrate the key issues pretty well.
Bottom-line is that our system is designed that way. Our economic system is rigged and the delta bleeds out on automatic.