Thank you. I've seen some speaker/bell wire at BB stores not rated for in-wall use. iirc, it needs to be marked at least CM, CMG or CMX, or CL2X or CL3X to be put in walls of residences. The likely code citation is 725.154(E)(4). You can of course email or phone Southwire for clarification; Ive called Commscope before to see if certain coax wire was rated CMR for commercial multi-floor penetrations.
My gut tells me the inspector is correct and that the wire you used is not suitable for concealment.
eta: if the walls are already up, in many cases a wireless system will be a lot less expensive that trying to repull that cable.