Arteta’s side were beaten for just the second time in 20 league games this season as James Tarkowski headed Everton’s winner in the 60th minute.
The Gunners’ only other league defeat came at Manchester United in September.
Arsenal still lead second placed Manchester City by five points, but the champions can close the gap to two points if they win at Tottenham today.
“This is not going to be a rose pathway,” said Arteta of Arsenal’s road to the title.
“This is going to be tricky and we will have to dig in and play much better than we did today.”
Everton came into the game on a run of four league defeats at Goodison Park for the first time since 1958.
That disastrous form cost Frank Lampard his job and Sean Dyche’s appointment got the desired bounce with a first win in 11 games.
“The minimum requirement is maximum effort and we saw that today,” said Dyche after his first game in charge.
While third-bottom Everton boosted their bid to avoid relegation, their Merseyside rivals Liverpool crashed to a fourth defeat in their last seven games in all competitions, a miserable run featuring only one win.
Jurgen Klopp’s side are languishing in 10th place, 11 points adrift of the top four amid their worst season of Klopp’s seven-year reign.
It is the first time since 2012 that Liverpool have lost three successive away league games, while they have already conceded more league goals this season than they did in the entirety of last term.
Facing a struggling team who kicked off in the relegation zone, Liverpool immediately crumbled as Joel Matip deflected Hwang Hee-chan’s cross into his own net after five minutes.
Wolves debutant Craig Dawson doubled the lead after 12 minutes when the defender smashed in from 10 yards.
With Wolves fans taunting Klopp with chants of “you’re getting sacked in the morning”, Ruben Neves sealed the rout with a 71st minute finish from Adama Traore’s cross.
“Obviously it was a horrible start. Two goals which cannot happen like that. We were 2-0 down because of our own fault,” Klopp said.
“We were passive in that period. I cannot explain it. There is no excuse for it.
“I’m so disappointed and angry about the first 15 minutes. We better change it. That’s true, 100 percent. I have no words for it really, I’m sorry.”
Casemiro red card
Ten-man Manchester United cemented their grip on third place with a 2-1 win against Crystal Palace.
In the seventh minute, United were awarded a penalty after VAR showed Will Hughes handled Marcus Rashford’s cross, with Bruno Fernandes coolly converting from the spot.
Rashford struck in the 62nd minute with a composed finish from Luke Shaw’s cross.
United were reduced to 10 men in the 70th minute when Brazil midfielder Casemiro grabbed Will Hughes by the throat.
Jeff Schlupp’s 76th minute strike set up a tense finish but United held on to win six successive home league games for the first time since 2017.
Fresh from reaching their first League Cup final for 47 years in midweek, fourth placed Newcastle had to settle for a 1-1 draw against lowly West Ham at St James’ Park.
Callum Wilson fired Newcastle ahead after three minutes, but West Ham levelled in the 32nd minute through Lucas Paqueta.
It was the first goal conceded by Newcastle in 574 minutes of Premier League action dating back to November.
Brentford climbed to seventh place and pushed bottom of the table Southampton deeper into trouble with a 3-0 win.
Kaoru Mitoma’s 87th minute header gave sixth placed Brighton a 1-0 victory against second bottom Bournemouth.
Leicester twice came from behind to win 4-2 at Aston Villa.
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