The Spaniard has scored three crucial goals in the Reds’ last two Premier League games.
“Fernando is massive to our title challenge,” Carragher said.
“It’s credit to the players and the staff that we are where we are considering he’s been missing for a long time this season.
“To get him back, the way he’s been firing against Chelsea with a couple of great goals and then he’s done the damage against Portsmouth, is so important.
“He has gained us an extra four points in the last two Premier League games. If he can keep doing that for the rest of the season then we will run whoever it is close for the title.
“He’s still not 100 per cent. We’ve got something to look forward to when he’s fully fit.”