City arrived in Birmingham having won all seven of their league matches but a pair of defensive blunders gave Aston Villa their chances and they took both.
Marc Guehi's early miscontrol allowed John McGinn to set up Nicolas Jackson for the opening goal, while goalkeeper Gianluigi Donnarumma allowed Jackson's low shot to squirm underneath him after the hour mark.
The result was particularly frustrating for City given the balance of play. They registered seven shots on target to Villa's two and repeatedly forced Zion Suzuki into action, but the Japanese goalkeeper produced a string of excellent saves to preserve the hosts' lead.

There was at least one positive for City with Erling Haaland scoring on his return from a foot injury. The Norwegian had sat out Tuesday's 5-1 Champions League rout of AEK Athens but headed home from Iliman Ndiaye's cross for City's lone goal.
The afternoon belonged instead to Suzuki, who continued to justify Villa's faith since they signed him in August to replace the departed Emi Martinez. Time and again he denied City, frustrating Haaland and company as Villa claimed their fourth successive home league victory over the Blues.
'You have to be clinical and avoid mistakes'
Maresca was left to lament his side's wastefulness and the two avoidable goals that ultimately decided the match.
"Performance overall was good, amount of chances we created...
"Absolutely, both (goals were avoidable). Sometimes you have to be a bit more lucky because we only conceded those two chances. But we created a lot of chances.
"We played most of the game in their box, but you have to be clinical and avoid mistakes like the two goals we conceded."
For Villa, after a turbulent summer of arrivals and departures - including Martinez who went to Chelsea - there were finally signs that Unai Emery's rebuilt side are beginning to settle after a poor league start of three losses from their first four games.
"Today was a really good test; I was so excited for this test," Emery said. "Today is one step forward."
City have little time to dwell on the defeat, with back-to-back meetings against high-flying Brighton & Hove Albion next on the agenda, first in the League Cup fourth round on Wednesday and then in the Premier League next Saturday.
"A top team, another one," City defender Ruben Dias said. "A different way to play , so we'll make the adaptation, then focus on ourselves; that's the main thing - our spirit, our will to win."
English Premier League
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