I was always under the impression that retailers fixed prices at rates like "$9.99", "99.95", "$1099.99" etc. just so that the poor consumers get 'brain-washed' into thinking that they are blowing up less money than they actually are, because people tend to associate amounts like "€5.95" with "€5.00" rather than with "€6.00".

However, a few days ago, a friend of my father told us that this is done just to ensure that the cashier deposits the money in the register (he/she has to return the change of 1 cent or whatever). This is possibly how this custom started but I doubt this is the primary reason for marking articles at such prices - today, at least.

Does anyone have further information about this practice, how it began, and its purpose today?

With scanners and electronic cash registers that compute the price, tax and change to be returned to the customer it's unlikely that a store clerk will pocket any part of the sale cost. The alternative is outright theft of the article, bypassing the cash register altogether.

No matter how the sale is made a dishonest clerk will be caught eventually. I think that, as you point out, harish, the pricing scheme of marking the dollars plus .95 cents was designed to make the buyer think that the actual price is less even though everyone knows that $39.95 is only a nickle less than $40.00.

Gasoline in the U.S., for example, is sold in tenths of a cent ($1.65 and 9/10). It is always, on every pump, the dollar and cent price plus 9/10 cent). So, the price is more accurately $1.66.

The origin of pricing this way may be that merchants wanted to demonstrate to the customer that their very lowest price that they could charge was a few cents less than what the product was worth, thus, in the days when every penny mattered, a few cents saved was a bargain. Today, it's just standard pricing.

I have also always understood that it was to make the item appear cheaper. When I was young (don't you love saying that?) many shops had cash drawers, not cash registers, they didn't ring the items up anywhere and they still cost just under the whole pound or whole shilling.