The Spaniard's contribution at Anfield had declined after initially scoring 56 goals in his first 79 Premier League games.
He went on to score 20 goals in 110 matches for Chelsea, which didn't come as a surprise for Carragher.
"I couldn't believe it. I knew we had kidded Chelsea. Those last 12 months, he was a shadow of his former self," Carragher told Sky Sports.
"Chelsea at that stage, I think the owner was still buying players who he wanted, [Andriy] Shevchenko was another case.
"I think the decision was made then - as soon as January comes, we are going for Fernando Torres.
"£50m was major money at that stage and we were all in a state of shock, we could not believe we had got £50m.