Yes, but it's hard to control shrinking so one way is to make a sample - the same stitch, size hook etc as your eventual piece - and measure it. Then shrink it following whatever process (doing it by hand in the sink gives you the most control over the process as you can keep stopping and measuring and stop when it seems about right).
Then apply the same process - same temperature water, same detergent etc - to your finished piece, because you now know the % it will shrink if you do "process x" to it and have a bit more control. So if it shrunk 10% you need to add 10% more stitches to it.
I often shrink and felt wool deliberately and simply make ir bigger randomly and then felt, stop, measure and just stop when it gets to the required size. Have found felted wool to be much warmer than non felted.