Kevin de Bruyne struck the only goal of the game to send City 13 points clear at the top of the table.
"It's simple, they scored one goal, we didn't," said the skipper. "I think we could have punished them a bit more as the game went on. We knew it was going to be a tight game and we couldn't score the first goal, which I feel would have helped us massively to get at least a point.
"We had some good chances, some half-chances that we could have scored. We know that they push you a lot, that they don't let you play comfortably, but I think that for the few spells where we had the ball we controlled it.
"We defended well. We were playing against a very strong side and we knew that it could be a difficult game. Of course, we are disappointed not to get something from it."
Azpilicueta continued: "After this game it is more difficult than before the game. We were 10 points behind, it could have come down to seven, and even then there still would have been a gap in between, but we lost so of course when you are 13 points behind it is very difficult.
"You cannot focus on that. You need to get the consistency back of winning games, of being solid, of scoring goals, if we want to get our rhythm.
"That's the first thing, get back to winning ways on Tuesday when we have a tough game against Brighton, away again. We have a busy schedule, we don't stop, so we have to recover well and go for it."
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