This paper studies the effect of ion-neutral collisions on the propagation of kinetic Alfvén waves (KAWs) in inhomogeneous magnetized plasma. The inhomogeneity in the plasma imposed by background density in a direction transverse as well as parallel to the ambient magnetic field plays a vital role in the localization process. The mass loading of ions takes place due to their collisions with neutral fluid leading to the damping of the KAWs. Numerical analysis of linear KAWs in inhomogeneous magnetized plasma is done for a fixed finite frequency taking into consideration the ion-neutral collisions. There is a prominent effect of collisional damping on the wave localization, wave magnetic field, and frequency spectrum. A semi-analytical technique has been employed to study the magnetic field amplitude decay process and the effect of wave frequency in the range of ion cyclotron frequency on the propagation of waves leading to damping.