"Seven people - four men and three women - were killed in the fire,'' the official told AFP on condition of anonymity, adding that goods worth some $5,000 had been destroyed in the blaze.
It was the second deadliest fire in Myanmar this year after 13 teenage boys were killed at a Muslim school in April, the official added.
Local media reported that the victims were employees at the Gandamar wholesale department store building in Yangon's northeastern suburbs.
The fire started at 1am (1.30am Thailand time) and it was brought under control by firefighters after an hour. The fire department is still investigating the cause of the blaze, the official said.
Workers in Myanmar department stores routinely work long into the night on duties including inventory checks and reorganising displays.
A police official said the fire was started by an electrical fault, originating in a hair salon on the upper floors of the building.
Fires due to electrical faults are common in Myanmar due to low safety standards in the poverty-stricken country, which is emerging from decades of military rule.
Substandard wiring was also blamed for the April fire at the Muslim school in Yangon. Dozens more students were rescued from that blaze.
Fire alarms and sprinklers are usually only installed at high-end hotels and some government buildings.
Authorities typically blame poor wiring on old cables that were installed many decades ago when Myanmar was under British colonial rule.