Mouth rashes in adults, especially women, could be due to a skin problem known as Perioral Dermatitis. A person suffering from this condition, has small red bumps in groups, all around the mouth. These skin rashes can spread to the chin, cheeks, and upper lip as well. This makes the skin very dry and flaky. This condition occurs in people, who have an oily face. It can also be caused by the usage of certain creams and lotions, which contain strong chemicals in them.