At least half of all babies will exhibit rash at least once during their diapering years.
There are many reasons for diaper rash, such as food allergies, yeast infections, skin sensitivity, chafing, and chemical irritation. Diaper rash can result from the introduction of new foods in older babies. Some foods raise the frequency of bowel movements which also can irritate. Changes in a breastfeeding mother's diet may alter the baby's stool, causing rash.
However, the most common reason for diaper rash is excessive moisture against the skin. Newborns should be changed every hour and older babies every three to four hours, no matter what kind of diaper they are wearing. Babies may experience diaper rash whether they are in cloth or disposable diapers.
Widespread diaper rash is a relatively new phenomenon that surfaced along with disposable diapers. Reasons for more rashes include allergies to chemicals, lack of air, higher temperatures because plastic retains body heat, and babies are probably changed less often because they feel dry when wet.
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Source: Real Diaper Association