However, City then went on a remarkable run, dropping just three points in their remaining 18 games.
Jurgen Klopp, Pep Guardiola
Pep Guardiola said he "does not know" if his Manchester City side can overcome a nine-point deficit and catch leaders Liverpool in the Premier League title race.
City are aiming to become the first side since Manchester United in 2009 to win three consecutive titles but now sit fourth in the Premier League.
"I am not a magician; I don't know the future," Guardiola said.
"We have Chelsea at home next. We will try to beat them."
City are now in a not dissimilar position to last term, when the Reds opened up a 10-point lead over Guardiola's side after 20 games, although at that stage Liverpool had played one match more.
However, City then went on a remarkable run, dropping just three points in their remaining 18 games, which included a victory over the Reds at Etihad Stadium.
The pivotal moment in that game came via a dramatic goalline clearance by John Stones.
But City were on the wrong side of a match-defining moment on this occasion when they were convinced they should have been awarded a penalty for a Trent Alexander-Arnold handball moments before Fabinho struck the opening goal.
Guardiola appeared visibly upset by the decision to allow the goal, suggesting any questions about it should be put to Mike Riley, general manager of Professional Game Match Officials Limited, the body responsible for referees in English professional football.
The City manager offered no comment on the incident beyond saying: "Ask Mike Riley and his people please."
He added: "Congratulations to Liverpool, they scored three, we got one but I'm so proud of my team, few teams can come here and play the way we did.
"We started incredibly well, we showed incredible bravery, they are the champions of Europe and it is the most difficult stadium in the world. We played like back-to-back champions.
"We cannot deny how good Liverpool are but the way we played, the personality, it was good."
'I can celebrate tonight' - Klopp
Liverpool manager Jurgen Klopp called the frenetic nature of the game "incredible" and "really wild", even if Fabinho's opener met with a muted response from the German.
"The problem was the VAR. I saw the discussions before the first goal and I was just waiting," Klopp said.
"It is not the same any more but it is no problem. I can celebrate tonight. It was so tough to play, the intensity of the game was so clear. It was all worth it, really great."
Headers from Mohamed Salah and Sadio Mane put Liverpool in control before Bernardo Silva pulled a goal back for the champions.
But it was not enough to prevent Liverpool from enhancing their prospects of a first domestic title for 30 years.
Only Manchester United (nine points in 1993-94) have enjoyed a bigger advantage at this stage of a Premier League season, with Klopp's side now eight points clear of Leicester and Chelsea at the top.
But despite that margin, Klopp played down its significance, with his squad now facing a busy run of fixtures between 23 November and 2 January.
"It's not important," he added. "Who wants to be first in early November? It's important to be top in May.
"Each point we have we need to go through the most intense period ever."