I have read few posts of persons talking about losing their wallet's containing BTC and couldn't recover it at all. Hence, as people keep losing their BTC due to loss of wallet seed phrase, can it affect or cause a decline in BTC supply entirely?
Coins lost due to losing private keys or seed phrase are out of circulation, but they are not provably removed from the circulation.
The only coins that are provably removed from the supply are those that are not claimed by the miner or those that have been burned using OP_RETURN.