The Gunners suffered their fourth defeat in a row in all competitions at the Amex Stadium, where goals from Lewis Dunk and Glenn Murray were enough to seal a 2-1 win for the home side, despite Pierre-Emerick Aubameyang halving the deficit.
The result leaves Arsenal 13 points adrift of rivals Tottenham, who sit fourth, with only nine matches left to play.
Manager Wenger felt his players were fatigued from Thursday's 3-0 home defeat to Manchester City and believes the team's top-four hopes are now practically at an end.
"It is very difficult, nearly impossible now, we are too far behind," he told BBC Sport. "We need two teams to collapse, not one.
"But at the moment we have different worries in how to come back to winning a game."
Wenger blamed his side's miserable first-half display on a loss of confidence off the back of a dispiriting week, in which they lost the EFL Cup final to City before a league defeat to the leaders by the same scoreline.
4 - Arsenal have lost four games in a row in all competitions for the first time since October 2002. Nightmare. pic.twitter.com/NxAuZA1VCl— OptaJoe (@OptaJoe) March 4, 2018
"We were passive, struggling for confidence and heavy legged but responded well in the second half," he said.
"It is difficult to recover from what happened to us last week. We are going through a tough time."
"It is important to recover mentally and physically," he said. "We are still jaded. We gave a lot on Thursday and you can see that today [Sunday]."