The Gunners headed to Anfield convinced that victory would keep their faint hopes alive, but a 3-1 reversal on Merseyside has them 13 points off the pace in fifth.
Cech concedes that the gap to table-topping Chelsea is now too great, with Arsene Wenger’s side needing to switch their focus to the securing of a top-four finish.
He told the club’s official website: "With the three points we would have still been in the chase for the title, but now I think we are too far away.
"I don't think Chelsea will lose so many points, so now we need to concentrate on finishing as high as possible and qualifying for the Champions League."
Arsenal put in a disappointing display against a side who started the weekend below them in the top-flight standings.
Wenger’s decision to start Alexis Sanchez on the bench has been widely criticised, with the Chilean helping to inject some life into a disjointed outfit following his introduction.
Cech acknowledges that the Gunners were well short of their best, despite having had ample preparation time in which to ready themselves for a crunch clash.
He added: "We had two weeks to prepare for the game. We knew they were fast on the counter-attack and that they like to press a lot, so we didn't want to give them a chance to counter-attack.
"The two goals we conceded in the first half were when we were in position, behind the ball and not in immediate danger. They always managed to find the opening unfortunately, and that shouldn't have happened because we should have been organised enough to prevent it.
"We were not at the level we should have been at in the first half, and it's difficult to say why."
Arsenal’s next outing sees them welcome Bayern Munich to Emirates Stadium for the second leg of a Champions League last-16 encounter that has them trailing 5-1 on aggregate.
They will then face Lincoln City in the quarter-finals of the FA Cup looking to salvage something from their season and keep themselves in the hunt for major silverware.