Other players can be muted from the pause menu rather than the inventory menu. The inventory menu will only give you options that are specific to your character. The pause menu has all of the more global stuff related to the game. If you pause, you can hover over the person who is being loud and mute them from here.
From the image below you can see the pause menu and the list of players that are in the game with you currently. Highlight someone and the option on the top right will change to allow you to mute.
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