Baharathi, I would suggest you go back to a much better dog food, since the first ingredient in Pedigree small breed brand is corn. It really is not a good food. You mentioned Nature brand, but I don't know anything about that particular brand. I would say definitely get Jimmy onto a meat based food, as long as he's not allergic to any certain meat. As far as the red spot goes , it could be anything from a bug bite to a food reaction. I would probably watch it and make sure it doesn't become infected, and if it gets worse or multiplies, take him to the vet. Good luck with the little guy.
You could try benadryl if he is biting at it alot. the dose range is .5 to 1mg per pound of body weight. Childrens strength is 12.5mg and the adult is 25mg. I would start out with the lower end of the dose range to see if it helps. If it doesn't you can go with the 1mg per pound dose. Most times the side effect is drowsiness but in a small percentage of dogs, as in people and kids, they get hyper on it. It's a pretty safe drug so it wouldn't hurt him to try it out.
I would also change his food back to what it was. Not to gross you out, but I have seen the pedigree dog food and remember one time seeing bits of some kind of hair mixed/baked into a piece of the hard kibble. Kind of skeeved me out.