Les Rouge et Blanc are still only five points behind Laurent Blanc's men, but the table-toppers can move eight points clear by winning their game in hand at home to Olympique de Marseille on Sunday night.
Ranieri freely admits that Monaco have no hope of overhauling PSG - but he insists that it was ever thus.
"We haven't lost the title because we lost this game," the 62-year-old Italian told journalists after his side's defeat at the Geoffroy-Guichard.
"We needed to be at 130 per cent to take the title and it's not possible. The title was promised to PSG before the season started and hasn't been lost now.
"We suffered from kick-off and at half-time I decided to play with two wingers and James [Rodriguez] centrally.
"We blocked our opponents but nothing more. We had two chances at the start of the second half and that was that."
Midfielder Geoffrey Kondogbia also conceded that Monaco had not deserved anything out of their trip to Saint-Etienne.
"We had an off day," the France international confessed. "We're disappointed by our performance and the result."