Debbie Bliss Cashmerino IS expensive. It's beautifully soft, but I agree that it's a lot to pay for a baby outfit.
Most of the baby yarns out there are very soft. I don't have a particular brand to recommend, though I've used Plymouth Encore DK for baby stuff and it's soft and washable. Not as soft as cashmerino, but not much is. Many of the other baby yarns are probably softer than the Encore, and I sure somebody with more baby knitting experience will chime in.
"Trust the pattern!"
Time flies like an arrow, but fruit flies like a banana.
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IngridKH on Ravelry