Yes, they absolutely do. That's what dictates difficulty. It is not deflationary, deflation is not the same as supply constraint. Deflation is a reduction in price level, constraining supply is precisely how it moderates the equilibrium of value which is why it is a threat to existing monetary control.

The bitcoin price level reduces as an effect of bitcoin's design, therefore it's a deflationary design.

Well, for now. Obviously it can't reduce forever, and it will eventually slam back up to infinity (bitcoin will collapse) when no normal person feels like it's worth getting any because so much of it is already owned by wealthy people. Until that happens we're surfing the Ponzi wave. Inflationary designs are way more stable.