Layered multi-ferroic materials exhibit a variety of functional properties that can be tuned by varying the temperature and pressure. As-synthesized CuInP$_2$S$_6$ is a layered material that displays ferrielectric behavior at room temperature. When synthesized with Cu deficiencies, CuInP$_2$S$_6$ spontaneously phase segregates to form ferrielectric CuInP$_2$S$_6$ (CIPS) and paraelectric In$_{4/3}$P$_2$S$_6$ (IPS) domains in a two-dimensional self-assembled heterostructure. Here, we study the effect of hydrostatic pressure on the structure of Cu-deficient CuInP$_2$S$_6$ by Raman spectroscopy measurements up to 20 GPa. Detailed analysis of the frequencies, intensities, and linewidths of the Raman peaks reveals four discontinuities in the spectra around 2, 10, 13 and 17 GPa. At ~2 GPa, we observe a structural transition initiated by the diffusion of IPS domains, which culminates in a drastic reduction of the number of peaks around 10 GPa. We attribute this to a possible monoclinic-trigonal phase transition at 10 GPa. At higher pressures (~ 13 GPa), significant increases in peak intensities and sharpening of the Raman peaks suggest a bandgap-lowering and an isostructural electronic transition, with a possible onset of metallization at pressures above 17 GPa. When the pressure is released, the structure again phase-separates into two distinct chemical domains within the same single crystalline framework -- however, these domains are much smaller in size than the as-synthesized material resulting in suppression of ferroelectricity through nanoconfinement. Hydrostatic pressure can thus be used to tune the electronic and ferrielectric properties of Cu-deficient layered CuInP$_2$S$_6$.