Arsenal currently sit at the summit of the table ahead of this weekend's round of fixtures, and the Welshman believes that they are fully deserving of their lofty position.
The Gunners missed an opportunity to extend their lead at the top on Wednesday evening as Joe Allen's dramatic late goal secured Liverpool a point from an enthralling encounter at Anfield.
Despite that setback, Hughes is certain that Arsenal will arrive at the Britannia Stadium in buoyant spirits and knows that his players will have to be at their best if they are to maintain their impressive home record against the North Londoners.
"Arsenal are top on merit, and of all of the top teams in the league this season they are the ones who are actually playing like a top, top team," he said on Friday afternoon.
"To be perfectly honest the rest have slipped away a little bit and have been uncharacteristic in terms of what you would expect from them.
"Arsenal have done really well though, gone about their business superbly and are playing some fantastic stuff at the moment.
"You sense that they see a real opportunity this year, so we are under no illusions as to how difficult the game will be for us on Sunday.
"We always tend to do well against them at home though, the atmosphere is always special - a real crackle to the crowd - and we seem to relish that."
He added: "We have a good record against them at home, and I am convinced that if we can play to the levels that we are capable of, then we can enjoy another productive afternoon this time round."