Most pepper diseases cause soft spots on fruit but this is dry & shrunken. Sorry!

I had some Gorria peppers (Espelette) with a similar issue. I don't know the cause for certain, but they were in-ground when containers would have been better, were stunted for most of the season and I'm thinking the soil might have been low on nutrients. I'm guessing an overall bad start carried-over throughout the summer for me.

Seems like you have a Broad Mite problem. They are about 1/10th the size of spider mites and they feed on the pepper blossoms, thus distorting fruit at the very early stage of development. If you have them this year you are almost certain to have them again next year.

Thank you, Barrie.

And you are correct. Just found an article on the problem. Did not know what to search for before.

https://extension.psu.edu/broad-mites-in-fruiting-vegetables

Thank you so much!