Although City have topped the table for much of the season, they are now five points behind leaders and reigning champions Manchester United.
And City could be eight points adrift by the time they kick-off against Arsenal on Sunday should United beat QPR earlier in the day.
If that happens, and City lose to the Gunners, Mancini’s men would be eight points behind their local rivals with just six games left.
Asked if that would mean the effective end of the title race, and City’s hopes of being crowned champions of England for the first time since 1968, Mancini told a news conference here Thursday: “If we lose against Arsenal and they beat QPR — yes.”
City have dropped points in a defeat at Swansea and draws with Stoke and Sunderland.
However, their Italian manager insisted: “I think always positive, I can’t think this.
“Against Sunderland we didn’t play very well, for me we were so flat in the first half.
“But we shot 25 times on goal, we had 65 percent ball possession. Sunderland shot three times at goal and scored three goals (in a 3-3 draw).
“We did some mistakes defensively but we were unlucky.
“But now we can say nothing, we can’t think about Sunderland. We should think positive for the next seven games.
“I think it may be more difficult but it is my opinion that this championship is not finished.”
He added: “Maybe, in this moment, there is someone that maybe doesn’t believe because it is difficult, but we believe always.
“Also we should play a derby — the derby will be three points, and I think in six games they (United) can lose other points.”