The sentence "the country is better off" is subjective. The country's GDP will go up if all prices go up, yes. But this will also mean that inflation will go up

The sentence "the country is better off" is subjective. The country's GDP will go up if all prices go up, yes. But this will also mean that inflation will go up, and in adjusted terms no one will be richer. The price deflator mentioned by the sibling is one of the ways to make that adjustment.