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Hives or urticaria are large, red or red and white raised areas of superficial skin swelling caused by an allergic reaction in the body. Special allergy trigger cells release chemicals, chiefly histamine, which causes this response in the skin. Along with the swelling and redness, the patient usually experiences intense itching.
The reaction is occuring from "the inside out," so creams and lotions won't help. Only a systemic oral medication will be able to block the allergic response. Keep the child as cool as possible - overheating, for example in the bath, just makes the rash worse and increases itching.
Hives are not caused by something totally new in the diet or environment. About half of all new cases of hives in children are caused by infection, usually viral. For the remainder of cases, the triggering substance had to have been ingested before, and an allergy-triggering antibody formed before the reaction could ever take place. Then the next time your child ate the peanut butter, boom. And the offending trigger could be something your child has had fifty times before with no problems.
Thus racking your brain for new things is pointless. Make a list of everything the child has had to eat or drink for two or three days before the rash developed. It won't help you much now, but the next time this happens (if there is a next time - it is often a one time deal) you can make the same list and start comparing to narrow down your search.
Your doctor will probably recommend over the counter diphenhydramine (Benadryl®) or may prescribe a different antihistamine if that doesn't work. Keep giving the medication as directed until you are pretty sure the hives are gone - for a day at least. Otherwise, the rash will reappear. Rarely, hives become chronic and may last for several weeks off and on. Regardless, they are always harmless and no cause for alarmunless your child experiences breathing difficulty with hives (rare, but it does happen; call your doctor ASAP if breathing difficulty appears with hives).