Victory in their final three games will see City crowned champions, but Carragher still believes that the Reds are in the hunt for their first league title since 1990.
He told Sky Sports News: "Liverpool have an easier game [next week] against Crystal Palace. City go to Everton and they could easily draw or lose at Goodison Park.
"Liverpool have still got a great chance if they win their last two games. This title is still on, and that's message that they should hammer home."
The defeat to Jose Mourinho's side ended a run of 11 straight victories for the Reds.