Hello Thank you for trusting HCM Dear your baby suffering from rash probably due to allergy. So dear lactacyd wash very rarely cause dryness and rash but not impossible. just check for baby soap or shampoos or moisturizing creams or blankets or towels which may contain itch mites may cause rash . Also check for fungal or bacterial infection may cause problems. Until examination of rash it is difficult to say what is the causative. Just withdraw the soaps and shampoos one by one and replace it other check it for rash. If not improving please consult your pediatrician he will examine and treat your baby accordingly. Take care.