The diamond sale following the item shop sale was really self-defeating in a sense because what's the point of giving a sale while you're going to raise prices anyways? I call that INFLATION.
Well, unfortunately, it is inflation.
The cash shop most definitely has upgrades that people want/need (depending on how they feel about being F2P or not). The only way to obtain those items in large quantities (barring festival rewards) is through diamonds. Regardless of who does the actual buying, when the cost of items in the item shop goes up, the cost to diamond buyers goes up as well. Poof. We hit an inflation cycle, because the diamond buyers raise their prices to compensate for the price jack, and those who are capable of farming gear raise gold prices to compensate for higher diamond prices. Competition in the market helps to keep prices down some, but it can't compensate for a 30-40% price hike in the cash shop (unless bad blood between guilds drives prices into the ground).
FEU really borked the in-game economy with this one. It was finally starting to balance out after the mega-inflation from the release of CH4. Now with CH5 looming, they started the inflation period early.