City pinched Carlos Tevez from Old Trafford during the close-season and also landed Emmanuel Adebayor and Kolo Toure from Arsenal as the club's Abu Dhabi-based owners handed Mark Hughes a massive transfer warchest.
Ferguson was infuriated when City erected a billboard in Manchester city centre with a picture of Tevez above the slogan "Welcome to Manchester" and has been quick to dismiss the threat posed by United's local rivals.
But Benitez insists Ferguson is worried about the threat City could pose this season.
"We can always talk about the top four, but Manchester City are doing a very good job and have bought some excellent players. I can understand why Mr Ferguson at Manchester United is a little bit worried," Benitez said.
"Aston Villa and Tottenham have also spent some money, so there will five, six or more fighting now."
While City have been splashing the cash, Benitez has only bought England defender Glen Johnson and Italy midfielder Alberto Aquilani.
Even those deals were offset by the departure of Xabi Alonso to Real Madrid, yet Benitez is confident Liverpool are strong enough to end United's three-year reign as champions.
"We have signed Glen Johnson and Alberto Aquilani, that is all, we are different," Benitez added.
"The important thing was to try and extend the contracts of key players. And that is what we did.
"We had 86 points last season to finish second, and we have more or less the same squad, so maybe we can do the same again or better.
"But we will need to improve at home, and Johnson as an attacking full-back is the sort of player who can make the difference in difficult home matches when opponents are defending.
"As for our title chances, the players know we were very close last season and they want to improve. We know what this team can achieve and they will be ready."
If Liverpool are to win the title for the first time in 19 years, Benitez will need Argentina midfielder Javier Mascherano will shrug off the disappointment of his aborted move to Barcelona.
After losing Spain midfielder Alonso, Benitez was determined to hang onto Mascherano and told him he would not be allow to leave Anfield despite expressing his preference for a switch to the Nou Camp.
Benitez admits now that there were many times during the close-season when he believes Mascherano's head was turned by his international colleague Lionel Messi.
But with the player still having more than three years left on his contract, Benitez refused to do business.
"Javier has a very good friend in the national team and that is Messi," he said.
"Messi was on to him every day and that is not easy, but Javier knows what we think of him and he will be okay.
"I talked with Javier, his agent and Barca. It is normal they see him as such a good player, and an option for them.
"We told Javier he was so important for us and we wanted to keep him. We were not talking about any price.
"He was a bit disappointed as it was a fantastic opportunity with a big club. But he is happy here, and as a player and a person you can trust him 100 percent."