Which is more acidic acetic acid or propanoic acid?
My best guess is you are interpreting the statement "inductive effect decreases as the length of alkyl group increases" somewhat out of context.

So, let's compare formic acid to acetic acid.  Formic acid has hydrogen bonded to the carbonyl, while acetic acid has a methyl group.  The methyl group is inductively donating, and as a result acetic acid is less acidic than formic acid. $\mathrm{p}K_\mathrm{a}$ difference of $1$ full unit.

So now, let us compare methyl acetic acid (a precise, but incorrect, alternate name for propanoic acid) to acetic acid. Methyl acetic acid has an inductive donating group at the $\ce{CH2}$ carbon. As such, we expect some donation, and a lower acidity for methyl acetic acid as compared to acetic acid. True, the donating group is one group removed from the acidic site, which means the effect of the methyl group on methyl acetic acid's acidity is diminished as compared to an electron donating group directly attached to the carbonyl, so the acidity reduction will be smaller. $\mathrm{p}K_\mathrm{a}$ difference, $0.12$ units.

After you have this concept in your head, purge the abomination of nomenclature that is methyl acetic acid from your memory.

Ron has some views on hyperconjugation that may also be useful in this context, but strictly speaking, I don't find them necessary.