Manuel Pellegrini admits that Manchester City lacked creativity in this evening's defeat against Arsenal, but he is adamant that the penalty awarded against his side should not have been given.

The Citizens saw their 14-game unbeaten run in all competitions come to an end at the Etihad Stadium as they fell to a 2-0 reverse.

Santi Cazorla successfully converted from the spot in the first half after returning skipper Vincent Kompany was adjudged to have brought down Nacho Monreal inside the area, while Olivier Giroud added a second 13 minutes from time.

"There are two principal reasons [why we lost]," Pellegrini told Sky Sports News. "One was the penalty, which changed the game. I don't think it was a penalty, but it was unnecessary [for Kompany] to do it.

"And we were not creative - we didn't have the ideas to cause damage in their defence. Without creativity it is difficult to score goals. The movement of Kompany allows [Monreal] to dive. I am not saying it was a bad mistake of the referee. The penalty changed the game, but it was not the reason we lost.

"Of course, I always give credit to the team that wins the game. Arsenal played very concentrated. We ran the whole game, pressed very well, but we didn't have the ideas of how to create the space in their defence. We still have to play against Chelsea so it will be a very decisive game. We will try to win that game to close that gap again."

Man City's potentially decisive meeting with current Premier League leaders Chelsea comes in two weeks' time at Stamford Bridge.