Seems that this issue with squashfs-tools was fixed by the guys
at openembedded.
See patch here:
https://github.com/openembedded/openembedded-core/blob/master/meta/recipes-devtools/squashfs-tools/squashfs-tools/0001-mksquashfs.c-get-inline-functions-work-with-C99.patch

I think in my case, this issue appeared because I wrote the Makefile
some time ago and it worked, then when I did the PR for it,
it wasn't working anymore, and I assumed it was still working.

Signed-off-by: Alexandru Ardelean <ardeleanalex@gmail.com>