Referring to Saturday's defeat at home to Manchester United, Guardiola admits standards are slipping.
He said: "United had the necessary quality both to defend and to attack on the counterattack. We must accept it.
"This is the level at which we must compete, against teams like Liverpool, Manchester United, Barcelona, Real Madrid, Juventus. These are our opponents and the reality is that we probably can't compete with them right now.
"Maybe we have to live this situation like that of a club that has to improve, we have to accept the reality for what it is and work hard. We are under 14 points for the mistakes we have made, but also for the quality of our opponents."