Jurgen Klopp’s side have opened up an eight-point lead at the top of the Premier League table and are yet to show any sign of weakness in 2019-20.
In contrast, Pep Guardiola’s title holders have already suffered shock defeats to Norwich and Wolves and find themselves playing catch-up with a depleted squad.
Carragher wants Liverpool to take advantage of injury and form struggles being endured at the Etihad Stadium by opening up an advantage that cannot be clawed back.
The Reds legend told talkSPORT: “I think what we are seeing with Man City now is they are being affected by injuries now in the same position and that’s a problem for them.
“That’s a problem for anyone even though they have got a better squad than Liverpool and you see how much it is hurting them.
“You may actually think it would hurt Liverpool more if they injuries because, as I said, they don’t quite the squad City have.
“But to be fair, Man City have problems where they are weakest, at centre-back, in terms of numbers and quality.
“But there is no doubt a big injury to a big Liverpool player will severely hamper them. So that’s why I don’t think anyone really at Liverpool is getting too carried away.
“It is a great position to be in, there’s no doubt, and if you didn’t say that you would be a liar. And what Liverpool have to do is capitalise as much.
“And not just not think eight points is a great lead; try and make it 10, make it 12, if possible. Especially while City have problems at the back, like having Laporte out.
“Because there is no doubt that when Laporte is back and City back on their feet, they’re a team capable of doing exactly what Liverpool are doing and going and winning 17, 18 games.”
Liverpool have been fortunate to see key men such as Virgil van Dijk, Mohamed Salah, Roberto Firmino and Sadio Mane steer clear of serious knocks, with an early setback for first-choice goalkeeper Alisson the only issue they have had to contend with.
The Brazil international is edging closer to full fitness once more, so Klopp will hope that his side can get stronger from here as they count down the days until a return to domestic action away at Manchester United on October 20.