As far as I know, "inertial frame" was not part of the vocabulary at that time, and it is besides the point. A group of free falling bodies towards a planet could according to Newton's mechanics be used for local calculations as if they are in straight uniform motion, discounting the acceleration from the planet's gravitation. On that point there is no disagreement between Newton and Einstein.
PS compare with modern usage:
"in a gravitational field the particle moves so that its world point moves along an extremal or, as it is called, a geodesic [..]; however, since in the presence of the gravitational field space-time is not galilean, this line is not a "straight line", and the real spatial motion of the particle is neither uniform nor rectilinear. [..]by a suitable choice of the coordinate system one can always [turn] an arbitrary point of pace-time [into] a locally-inertial system of reference [which] means the elimination of the gravitational field in the given infinitesimal element of space-time"
- Landau & Lifchitz (Fields)