@Carla1308 You don't have to accept the request. It is true that the host sets the price, not Airbnb, but platform glitches that affect pricing negatively for hosts are not uncommon. However, the fact the host said "Airbnb has not updated..." hints at using Airbnb as an excuse for not managing their pricing, rather than being the victim of a glitch.
Given the red flags with this booking, I would advise you to rethink keeping it. There's an increased likelihood you'll find things going south for you, either through an unexpected cancellation, or if not that, then problems during the stay. You can request Airbnb cancel it for you with refund, based on what has transpired.