A brace from Sergio Aguero along with goals from Carlos Tevez and David Silva kept City's slim Premier League title hopes alive and condemned the Baggies to their fourth defeat in six matches.
"We were beaten by a far superior team, quite simply," Hodgson told Sky Sports News.
"After the early goal we fought well and kept ourselves in the game by good defensive work and hard work. But when they scored the two quick goals early in the second half we were looking down the barrel of the gun.
"We shot ourselves in the foot a little with a couple of goals but we deserved to get nothing from the game, but the scoreline bothers me because we don't lose by that much very often."
West Brom sit 13th in the Premier League, 10 points clear of the relegation zone.