My understanding is that it's to prevent cashiers stealing..
When it's .99, the cashier has to open the till and give you 1p back. This means they can't pocket the £1, £5 or £10 note.
( spitsticker is not working on, Sat 24 Sep 2011, 15:44, 2 replies)

This^
Having read through this QOTW and seen so many object to the £1.99 stuff, why don't they find out what it is really for? But that would spoil a good ill informed rant.

When all transactions are electronic, we will see it diminish. Until then it's to stop low paid shop workers lining there pockets.
( jagwap, Sun 25 Sep 2011, 6:38, closed)

But the cashier stealing theory is bollocks.

( Ring Of Fire A petty, drooling belming butthurt retard., Sun 25 Sep 2011, 9:22, closed)

Part of the reason
is to keep lower denomination coins in circulation. If something costs £1.99 and you hand over £2 then that's another 1p back in circulation.

I broadly agree with the sentiment expressed in the OP but I also think that cunts like Tesco would cynically raise the price of something costing £10.24 to £10.26, so they could then round it up to £10.50, rather than down to £10. Anyone else?
(MrC. Having the most boring username on b3ta since 2004, Sun 25 Sep 2011, 22:40, closed)

Cashiers stealing...
I always assumed it was to make the prices sound lower to those in a rush - £2 sounds more than £1.99, despite being only 1p more in reality, which will catch out those short of thinking who don't just naturally round up in their head.
(442, Sun 25 Sep 2011, 7:07, closed)