You can't compare consoles to other stuff. That's my main point. Of course inflation matters. But it's irrevelant when it comes to consoles and general gaming.
Consoles have almost one and only purpose, which is gaming, and peoples doesn't want to spend more than 400$ just for gaming, because the games are already expensive enough (+game as a service stuffs). If the minimum you can get is 500$ + 60$ for one and only (AAA) game, that's way too much.
Remember, it's only for gaming. Not other purposes. You can access Hulu, Netflix, Prime Video and stuff on other devices almost everyone own.
Why AAA games doesn't cost 80-100$ then ? Because publishers know people won't buy it
N64 games have costed that much before, and modern games + DLC or season pass are there or above these values already. It might not happen the next year, but medium term the prices will rise to $70 - 80 with almost certainty.