England must now beat Costa Rica in their final match and hope the remaining results go their way.
"Our chances are unbelievably slim," Hodgson said. "We depend on Italy winning their next two matches and us beating Costa Rica by the requisite number of goals."
"To continue, we needed a result today. We needed a victory and we didn't get it."
Hodgson said Suarez, who underwent a knee operation last month and was not fit to play in Uruguay's opening match loss to Costa Rica, was quiet for most of the match but produced two moments of ruthlessness to separate the teams.
"I thought we controlled Suarez well in general play, he did very well to get away to the back post for the first goal but frankly for long periods of the game we kept him quiet.
"We are normally used to seeing him more active in and around the penalty area.
"The second goal was an unfortunate flick off Steven Gerrard's head and when he gets free with the goalkeeper he doesn't miss."
Downcast and laconic, Hodgson would not be drawn on what happens now for England.
"I think that in both games we've shown some elements of playing some good football and we've shown we are a team making progress," he said. "But results decide everything and both results have been negative."
Italy play Costa Rica on Friday before the final matches in Group D on Tuesday.
- Sports & Recreation
- Costa Rica
- Luiz Suarez