The rating is deflating for a reason that you did not mention, which is improvement. Let's say the average person starts at 600, but over the course of a year gains 300 rating point's. This will cause the average to go down, because the 300 rating point's came from other players, which decreases the average rating. Since most new players are new to chess they will improve 100s of rating point's. On a large scale, this will decrease the average rating.
That's part of what made this interesting... as far as the site's average is concerned, improvement doesn't matter! If someone improves from 600 to 2600 and it takes them 100 games to do it or 10000 games the average stays the same (if the RD is basically the same for everyone).
I had players play at random, meaning after a while everyone has about the same number of games, same RD. (the maths details of Glicko were more complicated so I used a modified Elo, but same idea).
But yes, your individual rating can be pushed lower because someone else improves. This happens because the points have to come from somewhere. If someone improves from 600 to 2600 after their high RD period then the group as a whole has to pay them (so to speak) 2000 points.
I would assume that the averege playing strength for each rating bracket has improved, because of improving players.
No because the players here at 1700 are mostly only 1550 elo max in my experience and the 1600 only 1450 elo...but most 1000 and 1150 are 1200+
Have in mind that many people have joined recently. Most of them are novices , so it makes sense that average rating is lower now.
Actually that would be interesting to check. We can probably expect the averages to go down due to CORVID.