Around 300 marchers walked from the commercial capital's outskirts as thousands - some cheering - looked on. The latest in a growing number of protests came hours after 13 pro-democracy activists - including the senior leadership of the 88 Student Generation Group - were arrested in the most serious clampdown by the Burmese junta in a decade.
But the protesters, watched by police and pro-government gangs, scattered after at least eight of their number were seized.
Houses belonging to the leadership were searched and documents removed in the midnight raids, with official Burmese media reporting the activists could face 20-year jail terms.
The attempt to decapitate the swelling movement protesting against Burma's dire economic situation reflects the generals' fears that the unrest could mushroom to match the 1988 protests, in which hundreds of students were massacred by the army.
On Sunday 400 demonstrators marched through Rangoon to show their outrage at the surprise increase in fuel prices a week ago. Natural gas prices rose by 500% while petrol and diesel almost doubled, forcing a huge rise in public transport fares.
The increased fares, which doubled overnight, hit poor labourers the hardest, swallowing as much as half their daily income. Food and other commodity prices have begun to rise as a result, fuelling an inflation rate of around 40%.
No explanation was given for the price rises. But analysts believe the junta's order that ministries boost revenues was the result of regime's economic mismanagement and the crippling $1bn (£500m) construction bill for the new capital.
Even the oil and natural gas reserves, which bring in around £50m annually from Burma's neighbours, swelling the coffers of a regime that has been in power for 45 years, do little to aid the hobbling economy.
Anger over the economic situation has been growing, with a number of small protests since February despite the risk of torture and imprisonment.
A new group, the Myanmar Development Committee, concerned solely with the economy rather than democratic freedoms, has emerged. Three of its leaders were among those seized in the raids, along with five student democracy activists.
But the seven seized figures from the 88 Student Generation Group will have been of greatest concern to the regime as they had brought together the disparate opposition.
Analysts compared the gathering storm over growing poverty to the 1988 demonstrations, which grew in to demands for political reform. The generals agreed to elections in 1990, but ignored the result when the National League for Democracy (NLD), led by Aung San Suu Kyi, won a landslide victory. She has spent most of the past 17 years under house arrest.
Min Ko Naing - a nom de guerre that means "conqueror of kings" - was among the most prominent of those arrested today. He spent 15 years in jail, where he was tortured for his part in the 1988 demonstrations, but was released in 2004.
Min Ko Naing and Ko Ko Gyi, also seized, are Burma's most popular dissidents, second only to Ms Suu Kyi. Her NLD has so far kept its distance from the demonstrations.
"No doubt the military fears people like Min Ko Naing," said Win Min, a Burmese researcher and professor at Chiang Mai's Payap University. "They're really scared. It's a really significant moment because it's not just the generation of 88, but a wide spectrum of people protesting and it could turn into a political movement as it did before."
Sunai Thasuk, a Burma consultant for Human Rights Watch, believes the scale of the economic crisis matches that of two decades ago and could sow the seeds of a meltdown.
"The conditions that led to the crackdown in 1988 are very similar to those now," he said. "We've got hyper-inflation but the people continue to be robbed by the regime. People are extremely angry. Potentially we could see a chain reaction. That's why we've seen this very harsh reaction against the leaders [of he protests]."
