Loreley

Pretty much this.
 
Just Google articles on the cost of living in Japan and you'll see that it's not just CDs, it's just about everything.
 
Basically take a country with low natural resources and a population of around 127 million (just 20 million under Russia!) and cram it all in a landmass roughly the size of the state of California. More people, limited space and resources and high demand will make prices go up. It's like  the US state of Hawaii, everything cost more because everything has to be imported. I know Japan makes various products domestically but a lot of the raw materials has to be imported from outside the country so I imagine that causes prices to inflate.
 
There's a lot of factors but just take the reasons above and it gives you an idea of why the prices can be so wack to some of us.
 
I know people whine, why don't they lower the costs of CDs especially indie bands. Look, their focus is their Japanese market not their foreign fans. Adjusting prices to appease foreign fans just doesn't make sense if they're not going to sell the CDs in that foreign market. Why would a US producer reduce the cost of CDs in the US market just because CDs are cheaper say over in Bangladesh or some other country. It's just not going to happen and just hope your local currency becomes stronger than the yen because it's just economics man.