Is "peper my rague" from the song mama mortin sings in chicago a sexual refence?

Yes, it is a sexual reference. The movie (and the stage production it was based on) references, in turn, a couple of other sources: the "women in prison" genre of movies made mostly in the twenties-thirties which always feature a sexualized prison matron and the songs and 'look' of the great blues singer of the twenties, Bessie Smith (who was a lesbian). Smith's songs usually contained the same kind of word-play sexual references as the one in 'Chicago' and the 'Mama Morton' character in the movie is a homage to her. The term "rock and roll", for instance, originated in the 1920's blues community as slang for sexual intercourse. Only decades later did it refer to a type of music.

Incidentally, there was another 'Chicago' movie made in the twenties which was the basis for the musical and which was loosely based, in turn, on an actual case of the period.

Well that line literally is refering to tomato sauce. Ragu is Italian for a meat based sauce. You are correct however, there is no denying the sexual overtones of the whole song.

"If you want my gravy, pepper my ragu, spice it up for Mama, and she'll get hot for you"