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First restart the phone then
settings > about phone > diagnostics > test > test touchscreen.
This might be a hardware issue, by any chance, does your phone has a protective film, glass and/or case?
You can also repair the phone with XC
Alternatives on How to backup Xperias
You'll be surprised
Hi @Updateissue,
Welcome to the community. I am sorry to hear you're having issues with the new update.
The advice uliwooly has provided is sound, including the screen protector. Many times, touch issues are caused by them. It may just be coincedental that it happened with the update. Try the software repair first anyway as this is likely to help with a faulty update, and failing that, try it without the screen protector. The next step after that would be sending the phone to your Local support team and they will remove the screen protector anyway.