City fired a blank in their 0-0 draw against Southampton on Saturday.
"We can only make that judgement really at the end of the season, but I've said all along, if you were prepared to pay £100million and a bit more for Harry Kane... you definitely wanted a striker," Cascarino told talkSport. "You think you need one, because you made a bid for a striker that didn't go over the line.
"The fact that you didn't get that striker, now 'it's not a problem', but it was a problem. Pep recognised he needed a centre-forward of a certain type and I think by the end of the season it will cost City the title.
"I think there will be games when a certain type of striker who can get you out of trouble, who can do things that not all your technically brilliant players can do, it's something quite basic that enables you to make the difference in a certain type of game.
"Yesterday [Saturday] was one of the examples that I think that are going to happen a few times during the course of the season.
"I think it will hurt City."
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