City currently sit fourth on the table, eight points behind leaders Liverpool, which have a game in hand. But SWP insists his old club can go on another of their famous title runs - so long as their best players are fit.
He told Tribalfootball.com: "In many ways it's wrong to rule them out of the title race just yet. You have to give respect to the teams up there now, such as Liverpool, Arsenal and Chelsea.
"Liverpool are running away with it at this minute, but Man City's focus right now won't be on challenging for the title specifically, it will be about getting everyone fit and the team returning to their best.
"If they can go on one of those runs of form that we all know they're capable of towards the back end of the season, then they'll have that chance to fight to the end. As we've seen for years and years now, they always fight to the last kick of the ball."
Asked if City may break norms and enter the January market to boost Guardiola's squad, SWP admits he can see that happening: "Whether through choice or their hand being forced, a lot of players have been injured throughout most of the season so far.
“It's easy to forget too that the players didn't spend much time together in pre-season after the Euros.
"You're looking at a lot of players at Manchester City who haven't played four or five games in a row; they haven't had chance to get their fitness or sharpness levels to their fullest yet.
"I can imagine because of the injury situations, they might be in a position where they look at things in January a bit closer than they have in previous years."
Meanwhile, SWP admits he's a fan of City's young wingers, Jeremy Doku and Savinho. However, he can't see either player developing into a genuine No10 as Kevin De Bruyne has over the years.
He said, "You can go back plenty of years and this is a topic which regularly comes up, with those key players who have dominated the Premier League getting ready to move on.
"It's a conversation which continues to come up. I don't think you ever look for a like-for-like replacement, because it's impossible to replace players such as Vincent Kompany, Yaya Toure, Kevin De Bruyne, Sergio Aguero and David Silva.
"You look to bring in players with potential who can do similar jobs in their own way, and you can still reap the rewards of that, as City have done in the last four or five years.
"I don't think they'll look to replace anyone, but they will look for players with similarities. One player might be someone who takes those risks with passes in the final third to Haaland.
"I'm a former winger myself; I love to see Doku and Savinho go past their full-backs, getting those crosses or shots in. It's a joy to watch them both, but they're both unlikely from what I see now to ever be playing in that number 10 role, which could be what City need when they next look at the transfer market."
- Shaun Wright-Phillips was speaking to Tribalfootball.com on behalf of casino.org