They definitely can cost that much, but they don't have to.
Hall hire isn't particularly expensive. Food for a 4 year old isn't expensive - jam, cheese, choc spread sandwiches, cheap frozen pizzas, biscuits, carrot sticks, jugs of squash/water.
If he wants a theme, then just ask kids to come dressed in that theme (optional, but we've had cowboy parties, superhero parties etc. No need to go overboard on decorations, some themed balloons, paper plates, supermarket cake will do.
Party bags don't need to be expensive - some stickers/bubbles/sweets and a slice of cake will be more than enough.
Skip the bouncy castle, and play some traditional party games - pass the parcel, musical statues etc. Sleeping lions can take ages! All very cheap to do.
I don't think I've ever catered for the parents, or taken my kids to a party where I was catered for, other than perhaps a sandwich or biscuit from the kids table leftovers, so I wouldn't worry about that.
At the end of the day, he's four. He'll have fun if he's just running around in circles with his friends - kicking a balloon about and playing some games. When he gets older, cut the guest list and take a dozen kids bowling or similar