My suggestion would be to apply both the UNPIVOT and the PIVOT functions to get the result.

The UNPIVOT will turn the PurchasingValue and SellingValue columns into rows. Once this is done, then you can pivot the data into your result.

The code will be:

select *
from
(
  select itemid, 
    case 
      when col = 'PurchasingValue' then 'P'
      when col = 'SellingValue' then 'S'
    end + cast(year as varchar(4)) new_col,
    value
  from yourtable
  unpivot
  (
    value
    for col in ([PurchasingValue], [SellingValue])
  ) unpiv
) src
pivot
(
  max(value)
  for new_col in (P2000, P2001, P2002, P2003,
                  S2000, S2001, S2002, S2003)
) piv;

See SQL Fiddle with Demo. The result is:

| ITEMID | P2000 | P2001 | P2002 | P2003 | S2000 | S2001 | S2002 | S2003 |
--------------------------------------------------------------------------
|      1 |  1000 |  1100 |  1200 |  1300 |   900 |   990 |  1080 |  1170 |
|      2 |   500 |   550 |   600 |   650 |   450 |   495 |   540 |   585 |

In SQL Server 2008+ you can use CROSS APPLY with VALUES along with the PIVOT function:

select *
from
(
  select itemid,
    col+cast(year as varchar(4)) new_col,
    value
  from yourtable
  cross apply
  (
    VALUES
        (PurchasingValue, 'P'),
        (SellingValue, 'S')
   ) x (value, col)
) src
pivot
(
  max(value)
  for new_col in (P2000, P2001, P2002, P2003,
                  S2000, S2001, S2002, S2003)
) piv

See SQL Fiddle with Demo

One easy way to pivot multiple columns is to just use Aggregate(Case) expressions.

SELECT  [Item ID],
        [P2000] = SUM(CASE WHEN [Year] = 2000 THEN [Purchasing value] END),
        [P2001] = SUM(CASE WHEN [Year] = 2001 THEN [Purchasing value] END),
        [P2002] = SUM(CASE WHEN [Year] = 2002 THEN [Purchasing value] END),
        [P2003] = SUM(CASE WHEN [Year] = 2003 THEN [Purchasing value] END),
        [S2000] = SUM(CASE WHEN [Year] = 2000 THEN [Selling value] END),
        [S2001] = SUM(CASE WHEN [Year] = 2001 THEN [Selling value] END),
        [S2002] = SUM(CASE WHEN [Year] = 2002 THEN [Selling value] END),
        [S2003] = SUM(CASE WHEN [Year] = 2003 THEN [Selling value] END)
FROM    ItemPrices
GROUP BY [Item ID]

Use a GROUP BY ItemID, with aggregate function SUM(isnull(value,0)) on each of the results columns.

I achieved something similar by pivoting the already pivoted dataset (essentially pivoting twice), then grouping by the necessary attributes to get the results Im after. Still executes in a couple of seconds with thousands of rows.' Using the example in the question, the pivoting twice is correct, there just needs to be a summing of the buy and sell values and a group by at the end of the statement.

SELECT [Item ID], 
        sum([P2000]),sum([P2001]),sum([P2002]),sum([P2003]),
        sum([S2000]),sum([S2001]),sum([S2002]),sum([S2003])
FROM 
(

SELECT [Item ID]
      ,'P' + [Year] AS YearOfPurchase
      ,'S' + [Year] AS YearOfSelling

  ,[Purchasing value]
  ,[Selling value]
  FROM [ItemPrices]
) AS ALIAS

PIVOT 
(
MIN ([Purchasing value]) FOR [YearOfPurchase] in ([P2000],[P2001],[P2002],[P2003])
)
AS pvt

PIVOT 
(
MIN ([Selling value]) FOR [YearOfSelling] in ([S2000],[S2001],[S2002],[S2003])
)
AS pvt2

group by Item_ID