Due to technical reasons Bitcoins are lost every day though. There is nothing that keeps the dead Bitcoins moving. So the supply is shrinking over the long term.

Bitcoin custody is getting better every day, so the supply shrinking is not a real, fundamental problem.

Presuming population continues to rise, any currency whose volume does not rise at the same rate is de facto deflationary. Similarly, assuming an increasing supply of goods and services in the market, the same logic applies. It’s possible to have a currency that’s neither deflationary nor inflationary, but Bitcoin is not that.