The Spain striker has scored once in 10 appearances this season, a statistic that goes some way to explaining why Liverpool are second from bottom of the Premier League after losing 2-0 at Merseyside rivals Everton on Sunday.
Torres is by no means the team's only problem, but Liverpool are sorely missing his assured finishing and ability to create goals out of nothing.
He scored 22 times for the team last season but, after suffering injury problems returned only in time to play a bit-part in Spain's World Cup triumph.
"He got battered in the World Cup for his performances for Spain and I think mentally he's a little bit low and he needs a goal or two to get his confidence back," Hodgson told Sky Sports.
"Certainly I had no qualms about his performance (against Everton). The chance at the end, if that had gone in, maybe that's the catalyst he needs to take him over the edge and get him playing at his very best.
"Fernando is going through a bad time, his confidence is low, he needs a goal, so if you are talking about him, I would have to agree."
It contrasts sharply with previous seasons. In 2008-09, Liverpool finished second to Manchester United and Torres scored 14 times in the league.
Liverpool's new owners, John W Henry and Tom Werner of New England Sports Ventures, were at Goodison Park for the derby defeat and it might not be long before Hodgson is asking them to release funds for players.
"The January transfer window is still two and a half months away and there is a lot of football to be played before then," Hodgson told reporters.
"We have the squad of players we have and, hopefully, they will work and win some games."
