Pellegrini guided City to the Premier League title in his first season but this campaign has been more inconsistent, with back-to back-defeats to Crystal Palace and Manchester United leaving them fourth in the table – 12 points behind Chelsea.
This year has also brought a Champions League defeat to Barcelona, while City were also knocked out of the FA Cup after a home loss to Championship team Middlesbrough.
Now former England boss Eriksson, who managed City for a season before being dismissed in 2008, says that for the money the club have spent, results have not been good enough.
He said: “With the squad City have, they should be doing better. They have the best players in the Premier League so they should be the best team, but they are not.
“I don’t know what is going wrong but, with the money they have spent, they have to do better. It is not good enough.”
Despite City spending close to £200m during Pellegrini’s reign, Eriksson believes supporters have not seen value for money as the side’s form has slumped dramatically in 2015.
He added: “These rich clubs expect to win every year but only one team can win the title. City won the league last year with the same players, so it is hard to know what the difference has been this season.”