Ferguson was convinced his side should have been awarded a penalty when Nathaniel Mendez-Laing was sent crashing by City full-back Mitch Hancox.
And Ferguson's mood was not helped when Russell chose not to show a second yellow card to the already-booked Callum Reilly for a cynical trip on Kane Ferdinand.
The Posh were already trailing to Nikola Zigic's 10th-minute opener when both incidents occurred and Chris Burke's strike 10 minutes from time added insult to injury for Ferguson.
He said: "If you're asking me whether or not the officials are good enough, the answer is nowhere near at this level.
"There were two big decisions in the game and the referee got both of them wrong as far as I am concerned.
"I see absolutely no reason why a forward would choose to go down when clean through and Nathaniel is adamant the Birmingham lad caught him.
"The assistant referee was 10 yards behind play so in no position to give a penalty while the referee clearly chose not to give one.
"I asked the referee why he didn't give the Birmingham lad a second yellow card and he said his foul was an accident, but again that's not how I saw it.
"It was one of those days where we didn't get the breaks, but if anyone thinks we deserved to lose that game, they are completely wrong.
"We were only prevented from going ahead by an unbelievable double save and were getting on top when Birmingham did score.
"We dominated the second half and I can't be disappointed with my players."