It could be a case of dry skin, but also could be something like eczema. Does the lotion give you any relief at all? Since it's spreading and hasn't gotten better, it's probably time to go see a doctor for an exam to make sure you are treating it in the best way possible, instead of just guessing.
In the meantime, does the lotion you are using have any perfumes at all? I'd try switching laundry detergent to something fragrance free, eliminate any fabric softeners, and make sure that any lotions you use are fragrance free. See if that helps to start and get to see your doctor.