In an inelastic collision, although momentum is conserved due to the nature of the interaction between the colliding bodies, kinetic energy is not conserved because some of that energy is transformed into other forms of energy.
When two objects collide inelastically, they typically deform each other, generate heat, and may even produce sound. This deformation can absorb kinetic energy, transforming it into potential energy stored in the deformed material. Additionally, friction and thermal interactions between the surfaces can release energy as heat to the surrounding environment.
As a result, while the total momentum of the system remains the same, the kinetic energy after the collision is less than the kinetic energy before the collision, with the "lost" energy accounted for in forms such as heat, sound, and deformation. Thus, energy is not absent; it just has been transformed into non-mechanical forms.