According to the Spaniard, the unexpected 'Miracle of Istanbul', coupled with a penalty shoot-out defeat of West Ham in the FA Cup final the following year, raised expectations to an unattainable level.
Looking back on that defeat of AC Milan, Benitez told The Times: "In some ways made things more difficult because the expectations became so high. Then we won the European Super Cup and FA Cup the following season and so suddenly everyone was saying, 'OK, the next step will be the Premier League title.'
"But then, when you don't win it, people say, 'Oh, you can't go to that next step,' when, maybe, we were operating at the next level up, but because the other teams around us were progressing as well, it didn't seem that way.
"In some respects, we were maybe our own worst enemies, but, of course, I'd prefer to have that problem, to be talking as a Champions League winner. People are talking now about us not having won the league for 18 years, but it was 21 years since this club had last won the European Cup."
Winning the league title has become Liverpool's Holy Grail and Benitez suggested that the time-honoured expectation that this 'will be Liverpool's year' was precisely one of the reasons why the club has failed to mount a sustained bid under his management.
"The key is not to say that we can win the title because it's clear that it's the most difficult league in the world to win. Look at the final of the Champions League last season, it was between Chelsea and United, who are at the top of the table in England," he explained.
"It's clear that we are going in the right direction and progressing. We have got good young players coming through who will be important, while those with experience are settling down now so it could be a very good season for us.
"Everybody can see that the team and squad is improving every year and that now we are much better, but will that be enough to win the title? That's the big question because it depends on the other teams as well."