You're making a slightly different, but equally interesting point, IMO.
What you are cluing into is that we are reaching a point of diminishing returns on Moore's Law, whereby to extract a significant (or worthy) advance in performance, you're not going to rely on silicon improvements alone anymore. From the "modern age" of gaming between PS1 Gen and PS4 Gen, the silicon advancements alone were astronomical. The PS1 CPU was on a 500nm process. The PS4 Pro is on a 16nm process. Next gen looks to be targeting 7nm. Combine that with an amazing run on improvements in rendering techniques, plus all the integrated "secret sauce" rendering that was being built natively into the silicon. There were also other market factors (desktop rendering, growth of CD/DVD/BD, massive advancements in storage density), all combined to create a golden age of graphics computing.
It was enough to rely on process improvements between generational shifts that you could mostly count on those advancements to not only bring down costs (reducing price over time) but have a significant performance bump without the need to really increase die area. The run on console improvements (as a percentage of growth) on $200-$300 boxes from 1995 - 2013 may never be seen again.
Going forward, we have a slowing of Moore's First Law, the application of Moore's Second Law (or Rock's Law) becomes more apparent. It's going to get more costly to produce these upcoming nodes. And the market dynamics around storage and media are no longer in play. So not only are the things we come to associate with consoles fixed in cost, in some cases they are getting either stagnant or more expensive.
So you are completely right - one of 3 things has to happen.
1. You're going to see smaller and smaller % leaps in performance between generations if you want low cost and price drops.
2. The price of consoles are going to have to go up in order to provide meaningful differentiation. You will see less price drops over time. This is your "advancement tax"
3. Console manufacturers will have to eat more loss on HW to offset #1 and #2.
So your point is super valid. Inflation has nothing to do with it. If you're paying attention to technology, the console business is going to come under tremendous pressure as it becomes harder and harder to deliver huge leaps in performance every few years at price points that were seen has historically successful.
I don't paint this as doom-and-gloom for consoles. Only that the traditional boundaries are going to have to be broken and accepted at some point.
Fun times ahead!
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