Kieran Agard was adjudged to have been brought down by Ben Nugent, with the Millers top scorer converting the spot-kick himself.
Posh remain in possession of the final play-off spot but have seen their cushion cut to three points after MK Dons won.
He said: "The table doesn't lie at this stage of the season and Rotherham are rightfully in the play-off places, but I thought we were unlucky to lose the game.
"I've seen the penalty incident six times now and it is a poor decision which has had a big bearing on the outcome of a big game.
"We made changes at half-time to try to give ourselves a bit more composure, but we couldn't get a goal and didn't carve out enough good opportunities.
"It is immensely frustrating that we aren't stringing more good results together, but we are giving our fans another roller-coaster ride."