Master's thesis, should I inform my supervisor about the mistake?
Everybody makes mistakes. What separates good researchers from poor ones, is how well we own up to them. I don't know the details of your work, but it is very possible that what you think is a devastating mistake, is an oversight which should simply be improved upon if the work is later submitted as a journal article. Note that it is very rare that a Masters thesis becomes a journal article unaltered.
You should get in touch with your supervisor and tell them that you have discovered this paper, which you think might be warning that your method is questionable under these specific circumstances. Then let your supervisor form their own opinion.