**Core Concept**
Iron deficiency is a common nutritional disorder affecting millions worldwide, particularly in pregnant women and their infants. It occurs when iron intake is insufficient to meet the body's demands, leading to a decrease in serum ferritin levels, which is a reflection of the body's iron stores.

**Why the Correct Answer is Right**
Iron deficiency in the mother can lead to inadequate iron transfer to the fetus, resulting in microcytic anemia in the infant. Microcytic anemia is characterized by small red blood cells (RBCs) due to the reduced production of hemoglobin. This occurs because iron is essential for the synthesis of hemoglobin, and without sufficient iron, the production of hemoglobin is impaired. The mother's diet lacking in iron, along with the increased iron needs during pregnancy, has exacerbated the iron deficiency, leading to decreased serum ferritin levels. The infant inherits this deficiency, resulting in microcytic anemia.

**Why Each Wrong Option is Incorrect**
**Option A:** Dermatitis is a symptom of vitamin B7 (biotin) deficiency, not iron deficiency.
**Option B:** Diffuse goiter is associated with iodine deficiency, which affects thyroid function and leads to hypothyroidism.
**Option C:** Peripheral neuropathy is related to vitamin B12 deficiency, which affects the nervous system and leads to neurological symptoms.

**Clinical Pearl / High-Yield Fact**
Iron deficiency anemia is a leading cause of maternal morbidity and mortality worldwide, emphasizing the importance of prenatal care and adequate iron supplementation during pregnancy.

**✓ Correct Answer: C. Microcytic anemia**