The defeat made it five matches without a win for the playoff hopefuls, while a run of just one win in their last 10 matches has seen them drop from automatic promotion contenders to sixth place.
Pearson is hopeful that the international break will give his side time to regroup and get back to basics, but admits that they are making too many mistakes at the moment.
"We didn't play very well and we are in a bad run of form at the moment. That level of performance is not going to rectify it," said Pearson.
"There were too many mistakes. We didn't play with any authority in possession and conceded two poor goals. We huffed and puffed in the second half and had quite a lot of possession but didn't show the quality to rectify the situation.
"We have got to get back to basics during the international break because we have worked too hard to get ourselves in a decent position to put it in jeopardy. There are still opportunities left for us and we have to keep our nerve. One of the disappointments today was that we have allowed the game to pass us by."
Leicester currently occupy the final playoff spot and are three points clear of seventh-placed Brighton & Hove Albion in the Championship table.