Jurgen Klopp's men are currently joint top of the Premier League table along with reigning champions City and Chelsea, having won six of their opening eight games this season.
A 0-0 draw at Anfield with City on Sunday ensured that the Reds preserved their unbeaten league record heading into the international break, with a game against Huddersfield at the John Smith’s Stadium next up in two weeks’ time.
According to Eriksson, who managed England between 2001 and 2006, and also spent a season in charge at the Etihad Stadium, Liverpool are on course to win their first Premier League crown, telling Sky Sports : "It's going to be very interesting as usual.
"A lot of people are saying that maybe it is time for Liverpool. I hope so because in my heart I'm a Liverpool fan. But I think Manchester City are still very strong.
"I liked Liverpool last season. They played very good football, very optimistic, working very hard, very impressive.
"They bought some new players, so they look very strong. Sooner or later they will win it, no? I hope it will be sooner."
Alisson, Naby Keita, Fabinho and Xherdan Shaqiri all arrived at Anfield during the summer, with the former, in particular, having a huge impact on the team in goal.
Eriksson then weighed in on the debate surrounding international friendlies, stating that he is a fan of the new UEFA Nations League format purely for competitive reasons.
"I liked friendly games, but I took them like a test to test new players," he added. "People didn't like that very much.
"I think friendly games are one thing, but when you come to competitive games, it's completely different. It's different for the country, the fans, the players, so it's good, there shouldn't be too many friendly games in one year because it's not very interesting."
England have two Nations League fixtures on the horizon over the next seven days, starting with an away tie against Croatia on Friday.
Gareth Southgate's side will then travel to Spain on Monday, where they will be looking to avenge a 2-1 defeat at Wembley back in September.