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This is very likely to be sebaceous cyst. It is common on this area and areas which have hair on body. When this gets mildly inflamed, this would look red. Initial antibiotics with a surgical excision is the treatment of choice.
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The sebaceous cysts usually can remain dormant for long time with no problem and can be watched. A physician visit is warranted if it get infected, increase in size, inflamed, red, hot and angry or painful. They won't go on their own and surgical treatment is the only option. Warm compresses are not advised as they can aggravate the inflammation.
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