According to Reading Rockets, the answer to this question depends on the context in which the child is reading. If he is reading in front of a group, or for pleasure, or for the purpose of appreciating literature, then you should NOT correct every mistake. During these activities, students are developing a love of reading, and as long as the meaning is preserved, they should be free to experience the "flow" of a good story.
In an instructional context, you may want to gently correct accuracy mistakes, but try to limit this to activities in which the main instructional goal is accuracy. You can build activities into your curriculum that focus on this specific skill.
Giving students the opportunity to read without the pressure of perfect accuracy will invite children to read more – and that is how they will improve!