Although Liverpool have a game in hand on Pep Guardiola's men, they go into Sunday's trip to Tottenham 12 points adrift despite playing just eight matches.
Liverpool's recent form has left a lot to be desired, having won just one of their last five in the Premier League ahead of the visit to Wembley.
A win for Spurs will take them to within five points of City, meaning they are one of the better-placed sides to challenge at the top, but Klopp believes Guardiola's men are the ones to beat.
"If you ask, 'Is the race already done?' City are so strong, flying along at the top of the table," Klopp said in quotes reported by the Liverpool Echo. "Maybe this race is decided already. I haven't a clue.
"But there is still a lot to get in this league and to play for, especially for us. We have improved as well since last year, that is how it is.
"Perhaps not too much in the results, but in creating moments, chances. A lot of better things than last year, but so far we have not taken the results.
"If we stay convinced about our way and bring in consistency from what we've had performance-wise so far, then we can have our best season. That is the next step. We can build on this base."