After Esmael Goncalves opened the scoring, Caley Thistle levelled from the penalty spot thanks to Billy McKay's 20th goal of the season.
However, the Buddies claimed a 2-1 win when Steven Thompson headed home late on.
Inverness must now pick themselves up ahead of their William Hill Scottish Cup clash with Kilmarnock on Saturday.
"It was very hard to take," said Butcher.
"We dominated the game from around the 25th minute and we are very disappointed we haven't managed to score a second goal from all the possession we had.
"It is our first loss in the league in some time and we have played much worse and lost - I would be concerned if we had played badly, however that wasn't the case."
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- Caley Thistle