Juve, who have won the last four Italian titles, have started the season poorly and are 12th in Serie A heading into this weekend’s fixtures.
Allegri’s side have won only two of their seven league matches, and have fallen to defeats against Udinese, AS Roma and Napoli.
Inter, by contrast, have won five and sit second on 16 points, two behind leaders Fiorentina.
“At this moment, the table tells us that Inter are favourites for the Scudetto then Roma, Napoli, Milan and eventually Juve," Allegri told reporters ahead of Sunday’s match.
“We must be realistic, tomorrow will not decide the league title, but it is still the Derby d’Italia and a major challenge," added the Juventus coach.
“We are behind in the standings, but a victory wouldn’t change anything. We need consistent results, we want to find ourselves in the title race in March.”
While Allegri is confident that defeat on Sunday would not spell the end of his team’s title hopes, former Juventus forward Gianluca Vialli is not convinced that the 'Old Lady' of Italian football could come back from a loss to their rivals.
“A defeat would be a heavy blow for either side, if Inter lose, they would not suffer a strong backlash in the standings, they’d still be in a good position, but it would be a major psychological blow," he told Tuttsport.
“If Juve were to lose, in my view they’d be definitively out of the title race and not just because of the table.
"Until recently they won games before they played them, instilling fear in their opponents to intimidate them, but they’re losing that now," he added.
"Winning at the San Siro could restore this terror effect, losing would increase the perception that they are beatable."
Victory on Sunday would move Roberto Mancini’s Inter 11 points clear of Juventus, but Inter defender Jeison Murillo has refused to rule the champions out of the running should his side win.
“We are above them, but the loser of the match will not be out of it as the championship is very long,” the 23-year-old told Il Giornale.
(Reporting by Ed Dove; editing by Toby Davis)
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