What is Eddy Current Loss ?

In transformer, we supply alternating current in the primary, this alternating current produces alternating magnetizing flux in the core and as this flux links with secondary winding, there will be induced voltage in secondary, resulting current to flow through the load connected with it. Some of the alternating fluxes of transformer; may also link with other conducting parts like steel core or iron body of transformer etc. As alternating flux links with these parts of transformer, there would be a locally induced emf. Due to these emfs, there would be currents which will circulate locally at that parts of the transformer. These circulating current will not contribute in output of the transformer and dissipated as heat. This type of energy loss is called eddy current loss of transformer. This was a broad and simple explanation of eddy current loss.