1. Psychologically 19.95 looks cheaper than 20.00 to a consumer shopping.
2. In the old days, the prices were set such that the checkout boy had to return a penny or two to the shopper. This, accompanied with the 'ching' noise that the till made ensured that the checkout people could not just sell an item and pocket the 5 pounds of whatever to their pocket -- they had to use the till and return a few shillings.
