Nobody knows!

The OED says “The form history and pronunciation history are complex, and present a number of difficulties which have not been adequately explained.”

So nobody really knows exactly why pretty has the ᴋɪᴛ vowel /ɪ/ today. It normally would not do so if it had evolved the way other words like it did.

That is, we don’t seem to know why pretty now more often rhymes with kitty or biddy /ɪ/ instead of with Betty or Freddy /ɛ/ or with chatty or daddy /æ/ as it once seems to have in days of old.

This word started out life as prættig, which is the noun prat (which today has the ᴛʀᴀᴘ vowel, not the ꜰᴀᴄᴇ vowel) plus the suffix -y (which today usually has the ꜰʟᴇᴇᴄᴇ vowel not the ᴋɪᴛ vowel) to derive the adjective. We know that that spelling once corresponded to its actual then-pronunciation because a thousand years ago we just wrote down whatever letters matched a word’s sounds.

But there have been dozens and dozens of different pronunciations over the next millennium, and we no longer even try to pretend that there’s any sort of one-to-one correspondence.

The Oxford English Dictionary says:

The Old English forms pætig, pæti show loss of -r- in consonant groups evidenced in other words in later Old English (see A. Campbell Old Eng. Gram. (1959) §475). Between the end of the Old English period and the 15th cent. the word is only attested in surnames (e.g. Simone Praty (1301), Henry Praty (1304), Johannes Pratyman (1343), Willelmus Pritty (1428)); in the course of the 15th cent. it becomes frequent in various senses.

The form history and pronunciation history are complex, and present a number of difficulties which have not been adequately explained. Forms showing the reflex of the original short stem vowel (Old English æ, (West Mercian, Kentish) e) continue to the present day in some varieties of regional English, e.g. pratty, pretty (the latter pronounced with /ɛ/); Surv. Eng. Dial. records pronunciations indicative of the former from Yorkshire and Cheshire, and of the latter from Herefordshire, Gloucestershire, and Monmouthshire; similar pronunciations are found in Scots and in U.S. regional English. Alongside these in early modern English are found lengthened forms (e.g. praty, preaty; now apparently obsolete) and forms showing subsequent shortening (e.g. pritty); the modern standard form has the pronunciation of the latter, but the spelling of a β form. [boldface mine —tchrist]

As to what a "beta" form is, here are its historical forms they provide in which they group sets of these as four groupings each headed by a different Greek letter, using alpha for the forms with A, beta for those with E, gamma for those with I, and delta for those with U.

• α. Old English pæti, Old English pætig, Old English prættig, Middle English prate, Middle English prathy, Middle English prati, Middle English pratte, Middle English–1500s pratie, Middle English–1500s praty, Middle English–1600s pratty, 1500s prattie, 1500s pratye, 1500s prayty; English regional 1700s– pratty (northern and midlands), 1800s protty (northern); U.S. regional 1900s– pratty; Scottish pre-1700 pratti, pre-1700 prattie, pre-1700 1800s pratie, pre-1700 (1900s– Aberdeenshire) prottie, 1700s–1800s proty, 1700s– protty (chiefly north-eastern), 1800s praitie, 1900s– pratty.

• β. Old English pretti (Kentish), Middle English prete, Middle English prettye, Middle English–1700s prety, 1500s–1600s pretie, 1500s–1600s prettie, 1500s–1600s pretye, 1500s– pretty; Scottish pre-1700 pretie, pre-1700 prettye, pre-1700 prety, pre-1700 1700s–1800s prettie, pre-1700 1700s– pretty, pre-1700 (1900s– in compounds) pretti-.

• γ. 1500s preatie, 1500s preaty, 1500s prittie, 1500s–1700s preety, 1500s–1700s (1800s– English regional, U.S. regional, and Irish English (northern)) pritty, 1600s prity, 1700s pritey; Scottish pre-1700 prittie, pre-1700 prity, pre-1700 1900s– pritty.

• δ. English regional 1800s– prutty; U.S. regional 1800s pruty, 1900s– prooty; Irish English (northern) 1900s– prutty.

As you see, all these exist, or existed, in the written record. Why certain of the many, many* variants prevailed over others remains something a mystery.

Even today when most of us say pretty as though it were spelled pritty with I, some regional Englishes still have pronunciations with A or with E or with U in their respective dialects. You probably haven’t heard any of those, though, and you would only rarely find then in print from writers using eye-dialect.

♫ I feel pretty, oh so pretty! ♫

You can hear the actress singing I feel pretty in a way much closer to today’s common pronunciation [ˈpʰɻʷɪɾi] in the famous song from this movie clip.

A footnoted afterthought

• I bet you will have also wondered why many, any both ended up with the ᴅʀᴇꜱꜱ vowel of penny instead of with the ᴛʀᴀᴘ vowel of granny or the ꜰᴀᴄᴇ vowel of rainy. But all that’s its own millennium-long story, different but no quicker told than this one. It might make more sense, though.